How Low Can Your Rate Go?

As Barclaycard cuts its interest rates yet again, we reveal the UK's cheapest credit cards, which charge ultra-low rates.

Good news for new Barclaycard Platinum MasterCard/Visa customers: the annual interest rate has just been cut by 3%!

From today, new Barclaycard Platinum customers will pay a lower rate of 14.9% typical APR on purchases, versus the previous rate of 17.9% APR. What's more, the other features of this credit card remain unchanged: it still offers 0% on balance transfers for a year (with a handling fee of 2.5% per transfer, minimum £6.25) and 0% on new purchases for three months. You can apply for this Best Buy card via the Fool.

This is the fourth time that Barclaycard has cut its rates during 2006. It cut the interest rate for Barclaycard Simplicity from 6.9% to 6.8% APR, Barclaycard Flexi-Rate went from 16.9% to 14.9% APR, and Barclaycard Student's rate dived 5% from 19.9% to 14.9% APR.

As I warned in Credit Card Rates Rocket, dozens of credit-card issuers have raised their interest rates since the middle of this year, so Barclaycard is going against the general trend of rising rates. Indeed, my recent research found that most of the UK's credit cards now charge an APR of 15.9% or more, which is more than eleven percentage points higher than the Bank of England's base rate, currently 4.75% a year. Ouch!

Of course, we all know that spending on a credit card and then allowing our balances to roll over from month to month is an extremely expensive way to borrow, right? Aha, but that's not necessarily the case, especially if you choose your cards carefully!

For example, you could transfer your existing credit- and store-card balances to one of dozens of different cards which offer 0% on balance transfers for an introductory period lasting up to a year. Alternatively, you could spend on a card which offers an introductory 0% on purchases, again lasting up to a year.

A third option is to give up "rate tarting" (switching from one 0% deal to another) and switch to a card which charges an ultra-low rate on purchases and other spending. According to independent financial analyst Moneyfacts (which powers the Fool's search engines for credit cards, personal loans, savings accounts and so on), these cards top the tables for the lowest standard interest rates:

As you can see, in a quick search, I found fifteen different credit cards with standard interest rates under 10% APR. The lowest charges a mere 5.9% APR, which is a whopping ten percentage points a year lower than most credit cards. Thus, you don't have to put up with rip-off interest rates -- vote with your feet and switch to a cheaper credit card today!

More: Use the Fool to find cracking credit cards, perfect personal loans and super savings accounts!