How to qualify for some of the lowest interest rates on a credit card

A credit card with a low-interest rate can save you a significant sum of money in the long run. However, getting a credit card with the lowest interest rate is not as easy as it sounds, as banks don't offer such credit cards to everyone. Financial institutions evaluate your net worth and credit score to approve or disapprove your request.

That said, you can still apply for a credit card with the lowest interest rate if you have the right information. Here is a guide that will help you qualify for some of the lowest interest rates on a credit card. First, we shall discuss the scenarios in which banks charge you interest on your credit card, other than your credit card loan.

When do banks charge interest on your credit card?

If you fail to pay your credit card bill by the due date

If you pay the minimum amount due (banks charge interest on outstanding amounts and transactions made after the due date)

You pay less than the minimum amount due

How to apply for a credit card with a lower interest rate

1. Work on your credit score

Banks decide your creditworthiness based on your credit score. A credit score is a three-digit number between 300 and 900. Credit scores are determined by a combination of factors, including your payment history, the debt amount, credit applications, and credit mix. An excellent credit score is above 750. You should improve your credit score if it is below 750.

What can you do to improve it? The following tips will help:

Make your credit card EMI payments on time

Clear all skipped EMIs

Use your credit card regularly. Not using your card negatively lowers your credit score

Don't use more than 30% of your credit limit to prevent damage to your credit score

Increase the credit limit on your credit card

Don't have several credit cards because this hurts your credit score

Remember, your credit score does not improve overnight. Using the tips above will help you improve your credit score over time, thus enabling you to apply for one online.

2. Negotiate with your credit card company

After you improve your credit score, you should speak with your credit card issuer about lowering the interest rate on your card. If you qualify for the bank's approval, they will approve your request; if not, they will deny it. Don't be afraid to tell the bank representative your side of the story because it is your right. Here are some tips to help you negotiate your credit card interest rate with your bank.

Go through the credit cards application options online to identify the lowest interest rates other credit card companies charge

Politely approach the customer service representative with logical arguments

Speak to a manager if you do not receive an appropriate solution

3. Apply for a new credit card

If your credit card company does not agree to your request, you should apply for a new credit card. Look for credit cards online along with their respective offers. Bank representatives will reach out to you once you fill out the online applications.

The following is a list of the top banks that offer credit cards in India:

Axis Bank

Bank of Baroda

Citi Bank

DBS Bank

HDFC Bank

HSBC Bank

ICICI Bank

IDFC Bank

IndusInd Bank

Kotak Bank

RBL Bank

Standard Chartered Bank

State Bank of India

YES Bank

Consider the bank that offers its credit card to you at the lowest interest rate. Or you can save your time by applying for the Bajaj Finserv co-brand credit card that offers you the power of 4 cards in 1. With reward points, cashback offers and annual savings, this card also offers one of the lowest interest rates in the industry.

Bottom Line

Your CIBIL score is the most influential factor for getting the lowest interest rates on your credit card. Therefore, you should work towards maintaining a credit score of 750 or above. A high CIBIL score helps you apply for a credit card with lower interest rates and easily get personal loans and other loans. Also, remember that once you avail yourself of the lowest interest rates on your credit card, you should avoid cash withdrawals and bank transfers using the same credit card. This is because banks charge higher interest rates on these financial activities.

Published on: Saturday, March 12, 2022, 10:17 AM IST