cardsAccording to the most recent Gallup survey, about half of American credit card users will carry a balance on their credit cards during all or part of the year, incurring expensive interest charges. Credit card interest rates are typically higher than mortgages or car loans because they are unsecured loans with no collatteral attached. And unlike student loans or a home mortgage, credit card interest is never tax deductible.

It’s no secret that interest charges add up fast, and can cost you hundreds or even thousands of dollars a year. That’s why it’s vital to do everything that you can to reduce your interest charges, by choosing the right credit card.

There are two strategies to chose a credit card to cut interest rates. The first is to find a card with the lowest standard interest rate, and the second is to find a card with a 0% APR promotional financing offer for new purchases and balance transfers.

Standard Interest Rates

By law, every credit card issuer must prominently disclose the important rates and fees of all of its products to new applicants. This required disclosure is known as a Schumer Box, after New York Senator Charles Schumer who fought against the industry’s habit of disclosing rates and fees in ultra-small type. You will always find the Schumer Box when you click on the “terms and conditions” or the “rates and fees” when comparing credit cards online.

The standard interest rate for purchases will be at the top. While it might seem like it’s best to just pick the lowest rate, it’s not that simple.

First, credit cards may offer several different interest rates or a range of standard interest rates, and the rate that you receive will be based on your credit worthiness.

People with the best credit scores will receive prime interest rates, while those whose scores are so low that they just barely qualify for the card will receive the worst rates. In general, the better your credit is, the lower your interest rate will be. You won’t be informed of your interest rate until you apply and your account is opened, but in general you can expect to receive a lower rate from a card that has a lower interest rate range than one that has a higher range. For example, a card that offers rates of between 10.99% and 17.99% will likely offer you a better rate than a card that offers rates between 13.99% and 21.99%.

You will also find that credit cards that don’t offer rewards will feature lower interest rates than the ones that do offer rewards. This is because it’s expensive to offer rewards in the form of points, miles, and cash back, and only the cards that forgo pricey rewards and benefits are able to offer the most competitive standard interest rates.

0% APR Promotional Financing

The other strategy for choosing a card to save on interest rates is to find an offer for 0% APR financing on new purchases and balance transfers. There are many cards that offer interest free financing for a limited time. By law, these promotional financing offers must last at least six months, but some of the most competitive offers can last 15 months or longer.

During the promotional financing period, you must still make your minimum payments but you will not be charged interest on your balance until the promotional rate expires. After that, the standard interest rate will begin to apply on any remaining unpaid balance.

The key factors that distinguish cards with promotional financing offers are the duration of the offer, and whether or not it applies to new purchases, balance transfers, or both.

Most cards with introductory financing offers will include both new purchases and balance transfers, but will have a balance transfer fee of 3%. However, there are currently two exceptions. The Slate card from Chase offers 15 months of interest free financing on both new purchases and balance transfers, with no fee on balances transferred within 60 days of account opening. In addition, the Capital One QuicksilverOne card offers 10 months of interest free financing on new purchases and balance transfers, with no balance transfer fee. All other credit cards from major issuers will impose a balance transfer fee of 3%. And although there are some credit cards that offer both introductory financing and rewards, it’s best for people who struggling with debt to avoid cards that offer rewards for increased spending.

Other Factors to Consider

In many cases, credit card users will find that the most competitive cards offer interest rates that are very close to each other. In these cases, it can help to consider other factors that can help find the lowest interest rate, or to manage your credit.

For example, many credit card issuers now offer some form of credit score to their customers each month. Knowing your credit score and tracking it each month can help you to understand how your actions affect your credit, helping to raise your score, and eventually receive a lower standard interest rate.

Another useful feature is a program to help cardholders pay off their balance as soon as possible. For example, Chase offers its innovative Blueprint program on its Slate, Freedom, Sapphire, and Ink cards. Blueprint can help cardholders avoid interest charges by allowing them to pay some purchases in full each month while carrying a balance on others. Blueprint also contains powerful budgeting and goal setting tools to empower cardholders to pay off their balances on a schedule that they set, or based on the maximum amount that they can pay each month.

Another factor worth considering is the card’s penalty interest rate. This is the rate that is imposed on your balance if you fail to make a payment on time, or pay less than the minimum payment. The penalty interest rate on most cards is above 20%, and may even be as high as 30%. Thankfully, there are now many cards that do not have a penalty interest rate such as the Discover it, Chase Slate, and Citi Simplicity.

Finally, when interest rates are roughly equal, you’ll want to consider other card features. For example, you can consider fees such as the annual fee, and any foreign transactions fees for purchases that are processed outside of the United States. In addition, you can consider the customer service reputations of the companies.

For example, both Discover and American Express have been ranking first and second in JD Power credit card customer satisfaction over the last several years. You may also wish to open up a credit card offered by the institution where you normally bank, so that payments are just a matter of a simple funds transfer between accounts.

Nobody likes to pay interest on their credit cards, but this is the price we must pay for borrowing money in order to make purchases. By choosing the right credit card, you can reduce your interest charges and pay off your balance as soon as possible.

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