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.

If you want to know whether a credit card has a good APR, compare it with the average credit card APR, which is currently above 18 percent. If the 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. That is why some 0 percent APR credit cards offer an introductory period where they do not charge you interest on your purchases.

Understanding how credit card interest works will help you choose the credit card that is likely to offer the best APR package. Here are some of the things to consider when looking at APRs.

What is a good credit card APR?

While there are many different types of credit card APRs, the most common one people are interested in 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, a good purchase APR for you really depends on your credit score. People with below-average credit scores will likely 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, you might want to work on improving your credit score first. Once your FICO Score passes 670, your credit will move from “subprime” to “prime.” This means you’ll become eligible for prime interest rates. As your creditworthiness continues to improve, you’ll be more likely to receive good credit card APR offers from lenders.

How to compare credit card APRs

When you’re comparing credit cards, take a look at each card’s APR range. If you’re in the market for one of the top rewards credit cards, for example, you might be considering the Blue Cash Preferred® Card from American Express (18.24 percent to 29.24 percent variable APR) or the Chase Sapphire Preferred® Card (20.49 percent to 27.49 percent variable APR).

The lowest APR you can get with the Chase Sapphire Preferred is around the national average APR, but it’s 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. The Blue Cash Preferred Card, for example, offers 12 months of 0 percent intro APR on purchases and balance transfers (then 16.99 percent to 27.99 percent variable APR). The Chase Sapphire Preferred, on the other hand, doesn’t have any 0 percent intro APR offers.

It’s also important to be aware of any penalty APR that may be applied if you miss a credit card payment. Both the Blue Cash Preferred and Sapphire Preferred may charge a penalty APR of 29.99 percent (variable).

With all of this in mind, decide which factors are the most important to you and choose your credit card accordingly.

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 it’s positive.
  • Avoid maxing out your credit cards. Keeping your balances low will improve your credit utilization ratio.
  • Pay off as many of your outstanding balances as possible. When you prioritize existing debts, you are one step closer to 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. Paying off your balance each month is ultimately the best way to avoid interest entirely. Here are our picks for the best low-interest credit cards.

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 Bankrate.com found that 78 percent of cardholders who asked for a rate cut received one. If you’re having trouble making your monthly payments, your issuer may consider you for a hardship program. Sometimes, you just need to ask.

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. Here are our picks for the best 0 percent interest credit cards.

The bottom line

Generally speaking, a good APR for a credit card is at or below the national average. Choosing the best APR credit card 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.