What is a good APR for a credit card?

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A credit card’s APR, or annual percentage rate, quantifies the cost of taking out credit. In other words, if you carry a balance beyond your credit card’s grace period, your APR will determine the amount of interest the card issuer can charge on that balance. So what is a good credit card APR?

If you want to know whether a credit card has a good APR, compare it with the average credit card interest rate. Currently, the average credit card APR is around 16 percent.

If your card’s APR is below the national average, that’s an excellent 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 credit 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.

Understanding how credit card interest works will help you choose the credit card that is likely to offer the best APR package for you.

What is a good credit card APR?

While there are many different types of credit card APRs, the main one to consider when it comes to credit cards is the purchase APR—the interest rate you pay on purchases.

While it’s easy to say that you should always look for credit cards that offer APRs at or below the national average, your credit history could make things a little more complicated. A good purchase APR for you really depends on your credit score. For example, an APR of 20 percent won’t be very appealing to someone with excellent credit who’s used to being offered APRs as low as 14 percent. But 20 percent APR might seem pretty good to someone with fair credit, especially if they’re just emerging from having bad credit and being offered APRs closer to 29 percent.

People with below-average credit scores will likely be offered higher interest rates than people with good or excellent credit, so it’s important to consider your current financial position rather than simply aiming for a specific number.

If you want the best credit card APR possible, you might want to work on improving your credit score first. Once your FICO credit score passes 670, your credit will move from “subprime” to “prime.” This means you’ll start to become eligible for prime interest rates. As your creditworthiness continues to improve, you’ll be more likely to receive lower credit card APR offers from lenders.

Learn more: Best credit cards for good credit

How to compare credit card APRs

When you’re comparing credit cards, take a look at each card’s APR range. If you’re evaluating the top rewards credit cards, for example, you might notice that the Blue Cash Preferred® Card from American Express offers a variable APR of 13.99 percent to 23.99 percent and the Chase Sapphire Preferred® Card offers a variable APR of 15.99 percent to 22.99 percent. The lowest APR you can get with the Chase Sapphire Preferred is around the national average APR of 16 percent, but it’s two percentage points higher than the lowest APR you can get with the Blue Cash Preferred.

You’ll also want to check whether the credit card comes with an introductory APR on purchases and/or balance transfers and whether you’ll get stuck with a penalty APR if you miss a credit card payment.

The Blue Cash Preferred Card, for example, comes with 12 months of 0 percent intro APR on purchases (then 13.99 percent to 23.99 percent variable APR) while the Chase Sapphire Preferred has no intro APR offer. But if you miss a payment with either card, you may earn yourself a penalty APR of 29.99 percent (variable).

How to qualify for a good credit card APR

The best way to get a good APR is to practice good credit habits. Here are some actions you can take right now to improve your score:

  • Make all of your credit card payments on time, every time. Payment history makes up 35 percent of your credit score, so make sure you’re maintaining a good one.
  • Avoid maxing out your credit cards. Keeping your balances low will improve your credit utilization ratio and help boost your score.
  • Pay off as many of your outstanding balances as possible. Work toward becoming debt-free.

As your credit score improves, look for credit cards with low interest rates. The better your credit score, the better interest rates you’re likely to be offered.

How to lower your credit card’s APR

There are two ways to lower your credit card’s APR. The first way to get a better APR on your credit card is by calling your credit card issuer and asking for a lower interest rate. If calling customer service and asking for a lower APR makes you nervous, keep in mind that a December 2020 survey from CreditCards.com found that 69 percent of cardholders who asked for a rate cut received one.

Credit card issuers are even willing to lower interest rates for people who are having trouble making their monthly payments. So, if you’re having trouble paying off your debt, contact your credit card issuer and ask if you can be considered for a hardship program.

The other way to lower your credit card’s APR is by building your credit. In some cases, lenders will offer better interest rates—including promotional 0 percent APRs—to their most creditworthy customers. Even if your current credit card issuers don’t lower your APR as a response to your newly improved credit score, you’ll be more likely to receive good credit card APRs when you apply for new credit cards or loans.

The bottom line

What is a good credit card APR? In general, a good APR for a credit card is at or below the national average, which currently hovers around 16 percent. A good APR for you, however, depends on your credit score. Work on getting your score as high as possible to gain access to credit cards with lower interest rates. If you want to avoid paying credit card interest, balance transfer credit cards can help you pay down your old balances interest-free—but the best way to avoid credit card interest is to never carry a balance at all.