Credit cards are a popular tool for managing day-to-day finances, but high interest rates can make them a costly affair. Recently, former US President Donald Trump proposed a 10% cap on credit card interest rates to ease the financial burden on consumers in the United States. This proposal has sparked global interest as credit card debt in the US surpasses $1 trillion.
But how does this compare with credit card interest rates in India? Let’s explore the interest rates on credit cards offered by Indian banks and learn how to choose the best low-interest card.
What is Trump’s 10% Credit Card Interest Rate Proposal?
During his 2024 presidential campaign, Trump proposed limiting annual credit card interest rates to 10%. This is a significant reduction compared to the 25-30% interest rates charged by many US credit card companies. The aim is to protect consumers from accumulating unmanageable debt.
While this proposal is yet to be implemented, it highlights the global issue of high credit card interest rates and raises questions about affordability for users worldwide.
How Do Credit Card Interest Rates Work in India?
In India, most credit card interest rates are calculated monthly. For standard cards, the interest rate ranges between 3% to 3.5% per month (approximately 36-42% annually). However, select low-interest credit cards offer monthly rates as low as 0.75% to 2%.
These rates depend on factors like the applicant’s credit score, income level, repayment history, and existing debts. Here’s a breakdown of low-interest credit cards from popular Indian banks:
Best Low-Interest Credit Cards in India
1. IDFC First Bank Credit Cards
IDFC First Bank offers some of the lowest interest rates in India, ranging from 0.75% to 2.99% per month.
- Popular Cards:
- IDFC First Wealth
- IDFC First Select
- IDFC First Millennia
- Features:
- No joining or renewal fees.
- Interest rates depend on the applicant’s credit profile.
- Reward points and cashback on specific purchases.
2. Axis Bank Burgundy Private Credit Card
Axis Bank offers an interest rate of 1.5% per month (19.56% annually) on its premium Burgundy Private Credit Card.
- Features:
- Joining/renewal fee: ₹50,000 + GST (waived for Burgundy Savings Account holders).
- Access to exclusive lifestyle privileges.
- Targeted at high-income individuals.
3. IndusInd Bank Indulge Credit Card
The Indulge Credit Card by IndusInd Bank charges a competitive interest rate of 1.79% per month (21.48% annually).
- Features:
- Joining fee: ₹2 lakh + GST.
- Renewal fee: ₹10,000 + GST (waived for annual spends above ₹10 lakh).
- Premium rewards and lifestyle benefits.
4. HDFC Bank Premium Credit Cards
HDFC Bank charges 1.99% per month (23.88% annually) on its premium cards such as:
- Infinia Metal Card
- Diners Black Metal Card
- Features:
- Joining fee: ₹10,000-₹12,500 + GST, depending on the card.
- Access to premium airport lounges and global benefits.
- Ideal for high-net-worth individuals.
Who Qualifies for Low-Interest Credit Cards?
Not everyone can avail of low-interest credit cards. Banks reserve these offers for low-risk borrowers with excellent financial profiles. To qualify:
- Maintain a High Credit Score: A score above 750 increases your chances.
- Stable Income: High, consistent income levels are essential.
- Clean Repayment History: Timely repayment of previous loans and credit card dues is crucial.
By meeting these criteria, you reduce the risk for banks, making you eligible for better terms and lower interest rates.
Tips for Choosing the Right Credit Card
If you’re considering a low-interest credit card, keep the following points in mind:
- Evaluate Your Needs:
- Are you looking for rewards, cashback, or lower fees?
- Low-interest cards may offer fewer perks compared to regular cards.
- Check Fees:
- Compare the joining and renewal fees.
- Opt for cards with fee waivers based on annual spending.
- Review Terms:
- Understand how interest rates are calculated.
- Check penalties for late payments or exceeding your credit limit.
- Understand the Repayment Cycle:
- Avoid rolling over balances, as even low-interest rates can lead to significant costs if dues are unpaid.
Why Full Payment Is Always Better
While low-interest credit cards can ease financial pressure, it’s always best to pay your bills in full every month. Carrying forward balances can lead to debt accumulation over time, regardless of the interest rate.
Final Word on Credit Card Interest Rates
India’s credit card interest rates are significantly higher than the proposed 10% cap in the US. However, low-interest cards from banks like IDFC First, Axis, IndusInd, and HDFC offer competitive options for eligible applicants.
By understanding the terms and evaluating your financial profile, you can choose the best card to manage your expenses effectively without falling into a debt trap.
