Low interest rate credit cards, with a couple of exceptions, are not known for showering cardholders with a heap of extra benefits. If you are lucky you might get a fairly low annual fee to accompany your low interest rate, but not much else. So the HSBC Low Rate Credit Card is a welcome addition to this sector of the market. The low interest rate is combined with a 20 months long interest-free balance transfer offer and the type of exclusive privileges and discounts program normally associated with much more expensive cards.
If you’re looking for a low rate card, it’s possibly because you expect there will be times when you cannot clear your account balance when it is due for payment. This means you will end up paying interest for at least two months, sometimes much longer. At 12.99% p.a., this card's low purchase interest rate is competitive with big and small banks.
There’s not much point in having a low interest rate on your card if you will pay for it in the form of a high annual fee. Yes, its nearly $100, but you are paying that for the many privileges, low ongoing purchase rate, and many other benefits.
If you already have a credit card debt you’re trying hard to repay, the HSBC Low Rate Credit Card can help you with your existing problem as well.
Bring your balance across to your new card, pay less interest, and free up some cash to pay off your debt.
If you make just the 3% minimum monthly repayments on a $5,000 balance transfer, after 20 months you will owe $3,166. That’s compared with the $4,057 you would still owe if you left it in a 20% p.a. credit card.
Many cards charge an upfront fee for making a balance transfer, and this one is no exception. The 2% balance transfer fee would amount to $100 on a $5,000 debt, and it is in fact, the equivalent of paying about 1.6% p.a. in interest over 20 months rather than 0% p.a.
And don’t be deluded into thinking that you will pay only 12.99% p.a. in interest on any amount of the transferred balance you have been unable to clear after 20 months. The revert interest rate is the much higher cash advance rate of 25.99% p.a.
Got your finances in order so that you don’t need to take up the balance transfer option? Then you can enjoy up to 55 days interest-free on purchases and bill payments, because even a low credit card rate like 12.99% p.a. is best avoided if possible. If you decline the balance transfer option and pay off your purchase balance whenever it becomes due, you need never pay any interest.
Shopping around for the lowest credit card interest rate makes sound financial sense if you think that there will ever be a time when you have an overdue balance on your card. But that doesn’t mean that you have to choose the most basic, stripped-back card on the market. HSBC clearly appreciates its interest-paying customers, and this is the card that will give them some of the privileges normally reserved for prestige cards.
Reviewed by Nilooka Dissanayake