Virgin Money Low Rate Credit Card

Would you like a credit card with one of the lowest purchase interest rate and annual fee combinations around, which still lets you transfer a balance at zero interest? You’ll find this rather unusual combination in the Virgin Money Low Rate Credit Card. There’s also a cashback offer, which you can take advantage of even if you transfer a balance, and still come out ahead.

Not the lowest credit card interest rate, but close to it

The card’s ongoing interest rate on outstanding purchases balances is 11.99 percent p.a. It’s a popular benchmark for low rate cards, and you’ll find several competing cards with this rate on our ‘Low Interest Credit Cards’ page in our Features section. You might choose one of them instead, but if you do you’ll have to be prepared to miss out on either this card’s zero-interest balance transfer or the lower annual fee.

A low interest rate like this is a great money-saver for anyone who is not confident that they will be able to pay off their total purchases balance every single month. If you had a constant unpaid balance of $1,000, for example, you would pay around $120 in interest annually, an amount much lower than the $200 per year it would cost you to have the same purchases balance on a card with an interest rate of 20 percent p.a.

Cash advance rate at the other end of the scale

The low rate promise does not extend to cash advances, however. Avoid taking cash advances from the card if you possibly can, because it has one of the higher cash advance interest rates around – 21.69 percent p.a. – and it will be payable from the date of the cash advance transaction until it’s repaid in full. Ouch!

Low ongoing annual fee

Cards competing with this one may offer a longer balance transfer, and a discounted (or even zero) fee in the first year, before a higher ongoing fee kicks in. But the Virgin Money Low Rate Credit Card lays all its cards on the table, with a low $49 ongoing annual fee, in the first year and every year. (Virgin say that the standard fee for this card is $99 and that you’re actually saving $50 per year.)

Unfortunately, it gets a little more expensive if you need a supplementary card on the account – $29 p.a. per extra card.

A reasonably long balance transfer offer, with no upfront fee

Once again, 14 months @ 0 percent p.a. is not the longest zero-interest balance transfer offer around, but many of the lengthier offers levy an upfront fee of up to 2 percent of the amount transferred, while this one has no fee.

If you were to bring across a $5,000 balance from cards where you are paying 20 percent p.a., you’d save $1,139 in interest during the life of the offer.

But there are two catches you need to avoid.

Firstly, the revert interest rate is the punishing 21.69 percent p.a. cash advance rate. Make every possible effort to repay your balance in full at the end of 14 months, to avoid destroying the savings you so recently pocketed.

Secondly, you’ll forfeit your up to 44 interest-free days on purchases while you have an unpaid balance transfer. You may still want to use the card for $1,000 of purchases in the first three months, to make the most of the cashback offer (see below), but other than that you’d be well advised to use cash or another card for your purchases in the first 14 months if you’ve transferred a balance.

Earn up to $100 with the cashback offer

Virgin Money will return 10 percent of your spending in the first three months of having the card, by way of a credit to your card account, up to a cap of $100 cashback (i.e. $1,000 worth of purchases).

There’s no doubt you could you make good use of an easy $100. While there’s no point in deliberately spending on things you don’t need, just to earn a cashback, most people should be able to channel an average of $334 per month in purchases through their card, without altering or increasing their everyday spending pattern.

And it’s still worthwhile taking up the cashback offer, even if you’ve transferred a balance. By spending around $334 per month for three months, you’re likely to have an average balance of $167, assuming that your expenditure is spread throughout the month, and provided you repay your full purchase balance at the end of each month. Your interest-free days are suspended until you repay your balance transfer but at 11.99 percent p.a. you’re going to pay only $1.67 in interest each month on that average balance of $167. Paying a total of around $5 in interest is worth it, for the sake of getting a $100 cashback.

No compromise on card functionality

Having a low rate and low fee doesn’t mean that you’ll sacrifice convenience and security. The card still has features that come with more expensive competitors, like Visa payWave for Tap & Go purchases under $100, and Fraudshield to monitor suspicious transactions.

There are, of course, no rewards points or other complimentary benefits on offer, but their absence is what keeps both the purchase interest rate and the annual fee satisfyingly low.

Fuss-free eligibility for a practical card

The eligibility requirements for this card couldn’t be simpler. You merely need to be an Australian resident aged 18 or older, with an annual income of at least $35,000. That will allow you to have a low-rate, low-fee card in your wallet, with a balance transfer option if you need it and a likely 10 percent discount on your first $1,000 of spending.

You can't balance transfer to the Virgin Money Low Rate Credit Card at the promotional balance transfer rate from:

• Bank of Queensland
• Virgin Money