What is a Good APR on a Credit Card?

If you usually pay your credit card account in full each month, have a significant emergency fund, and know you’ll never use the card to fund a huge purchase, a decent credit card APR might not mean much to you.

However, you should keep an eye on the APR if you intend to carry a balance at any time.

APRs can help you figure out if you’re getting a great deal or not by looking at the rates card issuers are currently offering, but first, let’s get clear on what an APR is.

APR stands for annual percentage rate. What’s known as an annual percentage rate (APR) is the cost of borrowing money for a year, and Depending on your credit score and the APR range of the card you’re applying for, credit card firms will decide your APR.

With the prime rate as a benchmark, APRs are linked to the interest rate banks charge customers with the best credit. When the prime rate rises, so do the interest rate on credit cards.

For interest rates, some credit cards have a wide range of APRs, such as 13 percent to 23 percent. That’s why you won’t always obtain the advertised APR.

APR is useless if you don’t carry a monthly debt because you won’t be charged interest, but assuming you have a debt, the APR will dictate how much interest you incur over time.

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Types of Credit Cards APRs

Most credit cards advertise an annual percentage rate (APR) for purchases, however, there are more forms of APRs.

To figure out the APR, you’ll need to read the tiny print on the card’s terms and conditions. APRs are classified into the following categories:

Promotional APR:

A promotional APR, sometimes known as an introductory APR, is applicable for a limited time following the account’s opening.

These promotional APRs, which are frequently zero percent, typically last between six and eighteen months and may be used to balance transfers or purchases.

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Purchase APR:

A purchase APR is an interest charged on purchases made with your card regularly.

This is the number that is often mentioned when discussing the card’s annual percentage rate. The purchase APR is only applicable if you have a balance on your card.

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APR on cash advances:

Advances in money In the event of an emergency, your credit card issuer may send you a “relief check” to help you get the money you need.

Not only do you have to pay a fee, but you also have to pay a significantly higher interest, which usually starts right away.

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APR for Penalty:

A penalty APR is a significantly greater interest rate than the one charged by the card issuer when you fall behind on your payments. Penalty APRs frequently exceed 30%. At all costs, consider making your payment each month to avoid being charged a penalty APR.

Understanding the various sorts of annual percentage rates (APRs) and reading the terms and conditions on your card will help you prevent being startled by a high-interest rate.

How to Estimate A Credit Card Annual Percentage Rates

The annual percentage rate (APR) on a credit card is determined by the type of card you select. Cashback cards, student credit cards, travel reward cards, and retail shop cards, for example, generally have higher interest rates.

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However, low-interest credit cards often have an annual percentage rate (APR) that is more than three percentage points lower than the national average for all credit cards.

As of September 2021, the national average rate for low-interest cards is less than 13%, and those with a great credit score may qualify for significantly lower rates.

When looking for a credit card, observe the following:

Credit card type:

It’s highly advisable to follow this simple principle: obtain a rewards credit card if you intend to pay your bill in full each month, but seek out a no-interest or low-interest credit card if you believe you will carry a balance at some point.

If you want the best of the two, consider getting a rewards card for everyday purchases and a low-interest card to keep in your wallet for large purchases or unexpected needs that may not be repaid quickly.

Your credit rating:

Credit cards normally advertise a variety of annual percentage rates, and you will not know your precise APR until you apply for and receive the card. While it is impossible to predict your APR in advance, consumers with less-than-perfect credit should anticipate an APR closer to the maximum if authorized.

What is a Great Credit Card Annual Percentage Rate?

Even though there are other sorts of credit card APRs, the most prevalent is the purchase APR—the interest rate charged on purchases. While it’s simple to argue that you should constantly look for credit cards with APRs that are comparable to or lower than the national average, the truth is that the best purchase APR for you is highly dependent on your credit score.

Individuals with below-average credit ratings will almost certainly be offered greater interest rates than those with outstanding credit. 

This means that a favorable credit card interest rate for someone with average credit is not the same as a favorable credit card interest rate for someone with exceptional credit, and if you would like the lowest possible credit card APR, you may want to first work on increasing your credit score.

Once your FICO Score exceeds 670, you will switch from “subprime” to “prime” credit. This implies you will begin to qualify for prime interest rates. As your creditworthiness improves, you’ll have a better chance of receiving favorable credit card APR offers from providers.

Is There A Credit Card With A Bad APR?

On the other hand, a terrible credit card APR condemns you to large interest costs and makes it difficult to manage your debt. A high APR also means that the interest costs offset any incentives or cash back you earn on your purchases.

You should try to avoid carrying debt on your credit card, regardless of the APR. However, this is especially critical if you cannot pay off your balance in full each month and your card’s APR is higher than the industry average of roughly 16%.

If you anticipate holding a large credit card balance, avoid cards with an annual percentage rate (APR) of more than 20%.

Additionally, be aware that a small number of cards – including some offered by shops – advertise annual percentage rates of 29.99 percent or higher.

How to Analyze Credit Card Annual Percentage Rates

When comparing credit cards, try looking at the annual percentage rate (APR) range of each card. If you’re looking for one of the best rewards credit cards, for instance, you can consider the following two cards:

  • American Express Blue Cash Preferred® Card: variable APR of 13.99 percent to 23.99 percent
  • Variable APR: 15.99 percent to 22.99 percent on the Chase Sapphire Preferred® Credit Card
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Chase Sapphire Preferred’s lowest APR is about the national median of 16%, but it is two percentage points higher than Blue Cash Preferred’s lowest APR. Additionally, you’ll have to see if the credit card offers a promotional APR on purchases and/or debt transfers.

For instance, the Blue Cash Preferred Card offers 12 months of 0% initial APR on purchases (followed by a variable APR of 13.99 percent to 23.99 percent), but not on balance transfers. On the other side, the Chase Sapphire Preferred does not provide 0% starter APR rates.

Additionally, it’s critical to be aware of any penalty APRs that may apply if you fail to make a credit card payment on time. Both the Blue Cash Preferred and Sapphire Preferred credit cards may have a penalty annual percentage rate of 29.99 percent (variable). Choose your credit card based on the aspects that are most essential to you.

What to Expect From High-Interest Credit Cards

APRs on rewards credit cards and shop credit cards are often higher. While they may provide useful benefits, bonuses, or discounts, they are not recommended if you carry a balance every month, as interest can chip away at incentives.

Take advantage of an 18-month balance transfer offer on the Citi® Double Cash Card, which offers 1% cashback on all transactions and a 1% cashback bonus on balance transfers. It offers a 0% initial APR on cash advances for 18 months, followed by a variable APR of 13.99 percent -23.99 percent.

APRs on store credit cards can be considerably higher than on rewards cards in general. Consider the following benefits of the Banana Republic Visa® Credit Card: The continuing annual percentage rate is 25.99 percent variables.

And APRs may be even higher on deferred interest incentives offered by some shop cards, which promote “no interest if paid in full” within a specified duration. (If you remain in arrears at the end of the promotional period, you will be charged all accrued interest retrospectively).

What to Expect From Low-Interest Credit Cards

Low-interest credit cards typically demand a strong credit score — 690 or above — to qualify. However, if you use them to finance significant purchases or transfer current high-interest debt, they can save you money on interest.

An ideal APR is a 0% promotional rate that allows you to defer interest payments for a specified amount of time. For example, the US Bank Visa® Platinum Card offers a lengthy 0% initial APR period of 20 billing cycles on purchases and balance transfers*, followed by an ongoing APR of 14.49 percent – 24.49 percent * Variable APR.

The second-best alternative is a low continuing rate, like the Lake Michigan Credit Union Prime Platinum Card, which is often considered one of the best credit union credit cards. The current annual percentage rate is 6.25 percent variables.

How to Qualify For an Excellent APR

Not many are going to be able to locate, or qualify for, a credit card that rates less than 10 percent APR. If you want an extremely low-interest rate card, you may have to resort to a credit union or lesser bank. The bigger issuers often compete on services and aren’t as competitively priced.

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To obtain a card with an APR lower than 13%, you’ll need an excellent credit rating or prefer to engage with a bank. Even this higher-than-average rate, though, can help you save money. On a $5,000 amount, lowering your APR by three percentage points below the average will save you $150 in interest payments per year.

What is an excellent credit rating that can help you receive a lower APR? A score in the mid-700s or better is great, but you generally won’t know what you may be eligible for until you apply.

Indeed, some individuals with excellent credit have been completely surprised when they apply for a low-interest card and receive an APR in the upper range. But you may take some efforts to try to avoid unwanted surprises when you apply for a new credit card. Here’s what to do:

Perform a credit check:

Each year, you are legally entitled to one complimentary credit report from each of the three main credit agencies – Equifax, Experian, and TransUnion. And the credit bureaus are issuing free credit reports every week through April 2022 because of the pandemic.


Is a 14% annual percentage rate a reasonable rate for a credit card?

A credit card with a decent APR is one with a rate of less than 14%. That is around the average annual percentage rate for credit card offers to those with great credit. And a zero percent annual percentage rate is an excellent APR for a credit card.

Is it possible to purchase a home with a credit score of 675?

If your credit score is 675 or above and you match all other criteria, you would have little to no difficulty getting a mortgage. A credit score of 675 qualifies a borrower to register for conventional, FHA, VA, USDA, jumbo, and non-prime mortgages.

What is the average credit score in the United States of America?

In the U.s, the median credit score is 698. The misconception that you have only one credit score is untrue. Indeed, you have a variety of credit scores. It’s prudent to monitor your credit ratings frequently.

Will paying off a loan early harm my credit score?

Even if you settle off the balance, the account remains open, and while repaying off an installment loan early does not affect your credit, leaving the account active for the duration of the loan and completing all payments on schedule is evaluated positively by credit scoring models and can enhance your credit score.

What is an appropriate credit limit based on my income?

Credit card credit limits for the majority of creditworthy applicants with stable salaries range between $3,500 and $7,500. Credit limits of up to or greater than $10,000 may be available to high-income candidates with exceptional credit.


For credit cards, a good APR is lower than the national average or equal to it; nevertheless, a good APR for you is contingent on the strength of your credit. Improve your credit score to gain access to credit cards with reduced interest rates.

If you want to stop paying credit card interest, balance transfer credit cards can allow you to pay off old balances interest-free—but the best approach to prevent paying credit card interest would be to never carry a balance.


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