When you compare credit cards, chances are good that one of the things you look for is a low interest rate on purchases. A low purchase rate means you can save money when you finance a purchase over time — anything from a trip to purchasing appliances for your home. But what if you find a credit card with other terms that appeal to you and it has a high purchase rate? Is it ever a good idea to apply for a high interest credit card?

Let’s take a look at purchase rates, why high interest rates are usually a problem, and when it might be a decent idea to put up with those higher rates.

Why High Interest Rates are a Problem

The big issue with high purchase rates is that they cost you money. In fact, they can cost you a lot of money if you only make your minimum monthly payments. If you plan to finance purchases regularly — keep an ongoing balance month-to-month — a high interest credit card is a bad deal for you. It’s like taking two steps forward and one step back every time you make a payment.

When High Interest Rates Might be Worth It

Just because high interest rates can cost you more in the long run, it doesn’t mean they’re always a bad deal. Ultimately it comes down to your intentions for a specific credit card. Let’s look at an example.

Interest vs Fees and Rewards — Let’s say you want a new credit card to finance one large purchase up front. After that purchase is paid off (which you expect will take approximately two to three months), you’ll use the card for everyday purchases and pay off the balance in full each month.

You’d like this new credit card to be a rewards credit card, and you find one that offers a significant number of bonus points with your first purchase. It might otherwise take you a year or two to earn that many rewards points. This credit card also happens to have a reasonable annual fee when compared to similar rewards cards.

Because this credit card offers you other ways to get your money’s worth and you plan to pay the balance off in just a few months, the high interest rate shouldn’t be enough to deter you. It could prove to be a much better deal than a low interest card with higher fees and a less appealing rewards programme. The ANZ Frequent Flyer credit card is a good example.

If you were going to take a much longer time to pay off the balance, it might be another story and the interest payments might be more than other savings and rewards.

That’s just one example of a time when a high purchase rate credit card might be worth it. Another is if you know you won’t finance purchases at all and you’ll take advantage of interest free days every month. So while high interest rates are never a good thing, sometimes they really are worth putting up with.