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A good annual percentage rate (APR) for a credit card is a rate that's below the current average credit card interest rate. A lower rate means you'll accrue less interest if you carry a balance on the card. With credit cards, "APR" and "interest rate" are used interchangeably since credit card APRs don't take fees into consideration (as is the case with other types of debt).
What Is a Good Credit Card APR?
A good credit card APR is one that's below the national average credit card rate, which is 20.09% as of the first quarter of 2023, according to Federal Reserve data.
Average rates may increase if the Federal Reserve continues raising interest rates because credit cards' interest rates are often based, in part, on a benchmark rate that's correlated with the federal funds rate. As a result, the standard for what's considered a good credit card APR can change over time.
How Your Credit Card APR Is Determined
Your credit card's APR could depend on:
- The card's interest rate range: Many credit cards have an interest rate range or several tiers of potential interest rates that the card issuer may offer.
- Your creditworthiness: The rate you receive will depend on your creditworthiness, which can be impacted by your finances and your credit history and score.
- Benchmark interest rates: Many credit cards have a variable interest rate, and your card's rate could go up or down as its issuer's benchmark rate changes due to business decisions or macroeconomic conditions.
- The type of transaction: Your card may have different APRs for purchases, balance transfers and cash advances. While the card's purchase APR may be the most important if you plan on using your card for transactions, it's still a good idea to familiarize yourself with the various rates.
With this in mind, what's considered a good APR for a credit card can also depend on the cardholder.
If you have a good to excellent credit score and can qualify for the lowest advertised rates, then a good rate for you might be a single-digit APR. But if you have a poor credit score, a good rate for you might be much higher.
How to Compare Credit Card Interest Rates
You can compare the interest rate ranges of the credit cards you're considering to see which might offer you the lowest rates. There are also some general rules that could steer your comparison shopping. For example, rewards credit cards will typically have higher interest rates than cards that don't offer rewards. Also, cards for people who are new to credit or rebuilding their credit (such as secured cards) might have higher rates.
If you're comparing card APRs because you expect to carry a balance soon, also look for a 0% or low APR introductory offer. Using one of these offers, you may be able to avoid paying interest on purchases or balance transfers (or both) during a limited promotional period.
How to Get a Good Credit Card APR
If you want a credit card with a low APR, it's important to know where to look, what to look for and what will impact your card offer. Here are three things you can do to get a card with a good APR:
- Improve your credit. Improving your credit score can help you qualify for a better interest rate on cards that have an interest rate range. It can take time, but it could be a good option if you don't need a credit card right away.
- Consider cards from smaller financial institutions. You may be most familiar with cards from major banks, credit unions and card issuers because they're well advertised and may offer the best rewards or benefits. However, sometimes smaller credit unions and community banks may offer lower-rate cards.
- Look for promotional offers. Some cards have a low standard APR for purchases, or they offer a promotional low or 0% APR. Using one of these can ensure you don't wind up with a high APR, even if you don't have an excellent credit score.
Reading through card terms on each card issuer's website can take a lot of time. If you want to compare credit cards quickly, you can use a tool like Experian CreditMatchTM and filter the results based on your preferences.
Also, consider trying to lower the APR of one of your current cards rather than opening up a new card. While it's not always possible, you could try to negotiate a lower APR if your credit or finances have improved since you first took out the card, or if you're experiencing a temporary setback that's making it difficult to afford your credit card payments.
How to Avoid Paying Interest Altogether
A low APR is nice when you need to carry a balance, but you can also regularly use a credit card without paying any interest. Here's how.
1. Pay Your Statement Balance in Full
If you pay your statement balance in full each month before the due date, then your purchases won't accrue interest during the statement period or during the grace period, which lasts from the end of the statement period to the bill's due date.
Some people incorrectly believe that carrying a balance can improve their credit score. While using your credit card is helpful, you don't need to carry a balance or pay any interest to benefit from using your card.
2. Stick to a Budget to Avoid Overspending
Being able to afford your full statement balance can be more difficult if you overspend because you're not tracking your expenses. Consider setting up a budgeting app and connecting your credit card to keep an eye on when and where you're spending money. One way to keep yourself on track is to treat a credit card like a debit card and only make purchases that you can already afford to pay for.
3. Paying Early Can Help, and It Potentially Improves Your Credit Score
Even with a budgeting app, it can be difficult to ensure you'll have enough money in your checking account to pay your statement bill—especially if you make large purchases at the beginning of your statement period and the bill isn't due for another six or seven weeks.
You could pay down your credit card balance throughout the month so you won't be surprised by a large bill. As an added incentive, early payments could lead to the credit card issuer reporting a lower balance to the credit bureaus. The lower balance leads to a lower credit utilization ratio (a comparison of your card's credit limit and reported balance), which can help your credit score.
Check Your Credit Card Offers
Although avoiding interest altogether is ideal, finding a credit card that offers a low APR can help you save money if you expect to carry a balance. If you're not sure which credit cards you might qualify for, you can check your credit score for free with Experian. The Experian CreditMatchTM tool can also help match you with credit card offers based on your credit, making it easier to comparison shop for cards based on their APR ranges, features and fees.
Learn More About APR
- What Is an APR?
If you're borrowing money, you can compare loans and credit cards based on their annual percentage rate (APR). Here's what that term means.
- What’s the Difference Between APR and Interest Rate?
You may see people using APR and interest interchangeably, but there’s a key difference you need to know.
- How to Avoid Paying Credit Card Interest
If you're looking for an opportunity to avoid interest on your credit card, there are a few steps you can take. Here's what you need to know.
- What Is a Variable APR?
A variable APR is a type of rate that changes over time. Here's what you should know about how variable APRs work and how to decide if one is...
- What Is a Fixed APR?
Unlike a variable APR, a fixed APR generally doesn't change over time. It includes the interest rate and fees that impacts the total cost of borrowing.
- How to Negotiate a Lower Interest Rate on Your Credit Card
Negotiate a lower credit card interest rate by calling your issuer—particularly the one you’ve had an account with the longest—and requesting a reduction.
- What Can Increase Your Credit Card’s APR?
Credit cards have three variable APRs for purchases, balance transfers and cash advances. Learn when and why your APRs could increase.
- APR Calculator
An APR calculator lets you pick which finance charges to include, helping you figure out which loan is cheapest.
- Best Intro 0% APR Credit Cards of 2023
These 0% intro APR credit cards can save you a lot in interest. Check out picks for the best cards.