What’s 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. Currently, the average credit card APR is around 16 percent.

What is a good APR for a credit card? If you want to know whether a credit card has a good APR, compare it to the average credit card interest rate. 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. However, 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.

Types of credit card APRs

There are many different types of credit card APRs. Understanding how credit card interest works will help you choose the credit card that is likely to offer the best APR package. Here are the most common credit card APRs:

  • Purchase APR: The interest rate you pay on purchases. This can be avoided if you pay off your statement balances before your grace period ends.
  • Balance transfer APR: The interest rate you pay on balance transfers.
  • Introductory 0 percent APR: A temporary interest rate offered to new cardholders. This can apply to the purchase APR, the balance transfer APR or both.
  • Cash advance APR: The interest rate you pay on cash advances. Often significantly higher than the purchase APR and the balance transfer APR.
  • Penalty APR: The interest rate applied after you miss a credit card payment. This is often significantly higher than the purchase APR and the balance transfer APR.

Nearly all credit card APRs are variable interest rates, which means they fluctuate up and down based on the prime interest rate. However, these APR shifts are often so minor that you won’t notice them unless you compare your credit card statements from month to month.

What is a good credit card APR?

So what is a good credit card APR? The answer might depend on your credit score. People with below-average credit scores will often 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.

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. 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”—which means you’ll start to 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 qualify for a good credit card APR

The best way to get a good APR is to practice good credit habits. The better your credit score, the better interest rates you’ll be offered. Here are some actions you can take right now to improve your score:

  1. 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.
  2. Avoid maxing out your credit cards. Keeping your balances low will improve your credit utilization ratio and help boost your score.
  3. 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. You can also contact your current credit card issuers and ask them to lower the interest rates on your credit cards. Credit card issuers don’t want to lose cardholders, so learn how to negotiate lower interest rates. In some cases, all you have to do is ask.

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 March 2017 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.

How to avoid paying interest

If you want to avoid paying credit card interest, try not to make purchases that you can’t pay off within your credit card’s grace period. In other words: don’t carry a balance from month to month, and you won’t get charged interest. As long as you pay off your credit card balance in full every time, you can use credit interest-free.

That said, many of us carry a balance now and then—and sometimes, those balances can compound into serious credit card debt. If you want to pay off that debt while avoiding credit card interest, consider a zero interest credit card or a balance transfer credit card. These credit cards allow you to transfer old balances and pay them off during an interest-free period.

Look for a zero interest or balance transfer card that gives you at least 12 months of 0 percent APR on balance transfers, and then work on transferring your existing balances and paying them down. The Citi Simplicity® Card, for example, offers an 18-month introductory 0 percent APR on purchases and balance transfers (for balances transferred in the first four months of account opening), followed by a variable APR of 14.74 percent to 24.74 percent.

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 is 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—but if you miss a payment, you may earn yourself a penalty APR of 29.24 percent. The Chase Sapphire Preferred, on the other hand, doesn’t offer an 0 percent intro APR and doesn’t charge a penalty APR. Decide which factors are the most important to you, and choose your credit card accordingly.

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. However, a good APR for you might depend 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.

The information about the Citi Simplicity Card has been collected independently by Bankrate.com. The card details have not been reviewed or approved by the card issuer.