Living with credit

Are low-rate credit cards an endangered species?

Kelly Dilworth

If you plan to carry credit card debt, you’ll save more money if you pick a plain vanilla card with a low-interest rate and minimal fees instead of a flashy rewards card with generous perks and big bonuses. But do low rate cards even exist anymore?

Answer: They do, but good luck finding one at a bank near you.

As high yield rewards cards hog all the attention, no-frills credit cards with genuinely low-interest rates are becoming increasingly hard to find. I’ve been tracking credit card rates for years, and I have noticed a considerable drop-off in the number of cards that advertise truly low-interest rates in exchange for skimpy benefits.

Among the 100 cards that tracks, just eight personal credit cards advertise a minimum interest rate below 11 percent. Among those eight cards, just one – the  U.S. Bank Visa Platinum card – is accessible to anyone with good credit and an internet connection. The rest come from regional banks and credit unions or from financial services companies that cater to military service members, such as USAA.

Meanwhile, the national average APR for low-interest rate credit cards has climbed to 12.7 percent – a  pretty high rate for cardholders with big balances.

Most of the so-called low-interest rate cards from big-name banks such as Bank of America, Barclays, Wells Fargo and Citi advertise minimum APRs between 11.74 and 15 percent and charge maximum rates as high as 24 percent or more – making  it next to impossible to guess ahead of time whether you’ll be granted an affordable interest rate. Other major banks, such as American Express and Chase, don’t even pretend to offer basic low rate cards anymore. Their lowest interest rate offerings start at nearly 14 percent.

Barclaycard used to offer a cut-rate APR of just 8 percent on the Barclaycard Ring Platinum Mastercard. But now, the best that new cardholders will be able to get is a minimum APR of 13.74 percent.

And even the U.S. Bank Platinum Visa’s APR of 10.74 percent is only available to cardholders with the best credit scores. If your credit is less-than-perfect, you could get hit with an APR as high as 22.74 percent.

Even banks that have earned a reputation for offering lower-interest rate cards, such as USAA, are upping their prices as federal interest rates increase. As a result, cards often advertise gapingly wide ranges of potential APRs. For example, the USAA Rate Advantage Visa Platinum card offers a fantastic minimum APR of 7.65 percent. But cardholders who don’t qualify for the best available rate could be charged an APR as high as 24.65 percent – a 17-point difference.

Some regional banks are also hiking prices, making cards with APRs below 10 percent an even more endangered species. For example, the APR on the BB&T Bright card recently rose from a low of 8.15 percent to a minimum APR of 11.9 percent.

Low-interest rate cards are still available, but they’re hard to find and get. For example, Navy Federal Credit Union and Pentagon Federal Credit Union continue to offer some of the best-priced cards around. However, they’re only available to the families of military service members and, in some cases, government employees.

In fact, to obtain a genuinely low-rate card these days, you typically need to be a member of one of the few regional banks or credit unions that offer basic, affordably priced cards without rewards. For example, many local credit unions still offer cards with rates as low as 7 to 8 percent. You just have to be lucky enough to live near one of the regional banks or credit unions that offers low-rate credit cards.

See related: Low-interest credit card reviews, Best low-interest credit cards: Winter 2016, Plain-vanilla credit cards: 5 reasons to choose one

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