Key takeaways

  • A good credit card APR is a rate that's at or below the national average, which currently sits above 20 percent.
  • If you don't have good credit, you’re likely to receive a higher credit card APR.
  • To qualify for a strong APR, practice good credit habits, including paying your credit card bill each month and keeping your credit utilization low.

A credit card’s APR — or annual percentage rate — is the fee you’ll pay for borrowing money with your card. If you carry a balance beyond your credit card’s grace period, your APR determines the amount of interest the card issuer can charge on that balance.

Understanding how credit card interest works will help you choose the credit card that is likely to offer the best APR package. Here’s what to consider when comparing credit card APRs.

What’s a good credit card APR?

While there are many different types of credit card APRs, the most common rate people tend to look at is a purchase APR — the interest rate you pay on purchases.

To know whether a credit card has a good APR, compare it with the average credit card APR, which is currently above 20 percent. If the card’s APR is below the national average, that’s a good APR.

Even a credit card at the national average is a good option, especially if you’re looking at one of today’s best credit cards that comes with rewards, bonuses and perks. Try to avoid cards with APRs that are significantly above the national average. If you carry a balance on those cards, you could end up paying a lot of money in interest. If you can qualify for one, 0 percent interest credit cards offer introductory periods of up to 15 months or longer, saving you interest on purchases and high-interest debt you transfer to the card.

How your credit affects a card’s APR

While it’s easy to say that you should always look for credit cards that offer APRs at or below the national average, a good purchase APR will depend on your credit score. People with below-average credit scores tend to be offered higher interest rates than people with good or excellent credit. This means that a good credit card interest rate for a person with fair credit is different from a good interest rate for a person with excellent credit.

If you want the best credit card APR possible, work on improving your credit score first. After your FICO Score reaches 660, your credit moves from the credit classification subprime to prime. A prime credit score unlocks your eligibility for prime interest rates — or lower rates. As your creditworthiness continues to improve, you’re more likely to receive stronger credit card APR offers from lenders.

What to expect from credit cards with high APRs

Credit cards with higher APRs typically come with more relaxed credit score requirements than cards with lower APRs. As a result, the features of these cards can be less robust than cards with low APRs requiring stronger credit. Other differences can be rewards that are less flexible or valuable than lower APR cards, or more numerous or expensive fees.

This doesn’t mean you should always avoid cards with high APRs — they can still offer great value for cardholders. Store and retail credit cards are a great example: They’re easier to qualify for than standard rewards credit cards — you can often apply for store approval within minutes — and feature more niche reward opportunities than traditional rewards cards. The REI Co-op® Mastercard® is a store card that earns 5% back on REI purchases and 1.5% back on all other purchases, which can be lucrative for REI enthusiasts. But you can redeem your earned rewards on REI purchases only, and the card carries a high APR of 30.24% variable.

Credit-building cards often carry lower credit limits, high APRs and high fees as a tradeoff for allowing those with poor or fair credit to qualify. It’s a tradeoff that can ultimately work in your favor if you’re looking to build or rebuild your credit.

How to compare credit card APRs

When comparing credit cards, weigh those factors that can either save you money or make using the card more expensive, starting with each card’s APR range.

The best rewards credit cards include the Blue Cash Preferred® Card from American Express at 19.24 percent to 29.99 percent variable APR and the Chase Sapphire Preferred® Card, offering 21.49 percent to 28.49 percent variable APR. Comparing the two cards, the lowest APR you can get with the Chase Sapphire Preferred is a bit above the national average APR, yet it’s higher than the lowest APR you can get with the Blue Cash Preferred.

Also confirm whether the credit card comes with an introductory APR on purchases or balance transfers. The Blue Cash Preferred Card, for example, offers 12 months of 0 percent intro APR on purchases and balance transfers, and then 19.24 percent to 29.99 percent variable APR after. The Chase Sapphire Preferred, on the other hand, doesn’t come with any 0 percent intro APR offers.

And be aware of the penalty APR that may be applied if you miss a credit card payment. Both the Blue Cash Preferred and Sapphire Preferred charge a variable penalty APR of 29.99 percent or higher after a missed payment.

How to qualify for a good credit card APR

The better your credit score, the better interest rates you’re likely to be offered. Paying off your balance each month is ultimately the best way to avoid interest entirely, along with other good credit habits that can lead to a strong credit score:

  • Pay your credit card statement’s minimum payment on time, every time. Your payment history makes up 35 percent of your credit score, so make sure it’s positive.
  • Don’t max out your credit cards. Keeping your balances low can improve your credit utilization ratio, which affects your credit score.
  • Pay off as many of your outstanding balances as possible. When you prioritize paying down existing debts, you avoid unnecessary interest, fees and penalties.

As your credit score improves, look for credit cards with low interest rates that you can qualify for. And don’t hesitate to reach out to your existing card issuer to negotiate a lower interest rate if you see an improvement in your credit score.

The bottom line

Generally, a good APR for a credit card is at or below the national average. But the APR you ultimately get depends on your creditworthiness and credit history. Work on improving your score to as high a number as possible to unlock access to credit cards with lower interest rates. A balance transfer credit card can help you pay down your old balances interest-free — but the best way to avoid credit card interest is to not carry a balance at all.