What Is a Good APR for a Credit Card?

In short, the lowest one possible. Credit card interest fueled by the card’s APR is what makes credit cards so expensive. Often credit card consumers don’t even think to check the APR they are paying on their cards, which can be dangerous. For example, Citigroup was found to have overcharged 1.75 million customers in 2018. Do you know what you’re supposed to be paying for your credit cards?

Chances are you have no idea. It’s enough to make you wonder, what is a good APR for a credit card? To answers that, it’s important to understand how the interest rates that are used for cards work and how they are driven.

What is a good APR?

Good is different than average. The average credit card APR is just short of 17 percent, but it fluctuates a bit regularly as new cards are offered. That doesn’t mean that you should assume 17 percent is good. It’s actually pretty high in terms of interest rates, especially if you tend to carry a balance on your cards from month to month.

A personal loan with a fixed interest rate falls under 15 percent most of the time and might go as low as 10 percent. A mortgage often has an interest rate of 4 percent of less, at the time of writing, and many car loans offer 0 percent interest.

So why are credit cards so much more expensive? The APR on credit cards are driven by multiple factors including:

• Risk. The more risk the bank feels like they are taking, the higher the interest rate will be on the credit card. Cards for those with previous problems with credit cards will almost certainly have higher rates.
• Your credit score. Your credit score is an indication of how well you have used credit in the past. A good credit score means you are a good borrower and banks will usually offer lower interest rates.
• Your use of the credit. If you make late payments you will be subject to higher penalty APRs.
• Special promotions. Different cards have different APRS, especially if they offer an introductory rates. This can make it hard to answer what is a good APR for a credit card. The initial zero percent is excellent, but if it jumps to more than 18 percent after the introductory period, you may be setting yourself up for failure.

APRs can also vary wildly across multiple institutions. Some banks charge more than 20 percent. Others charge less than 10. Often you’ll find the lowest interest rates on credit cards offered through credit unions.

So what is a good APR for a credit card? The lower the better, of course, but anything under 14 percent is considered good. Below 10 percent is considered an excellent rate, and will be reserved for those with excellent credit.

Getting a Low Interest Rate on Your Credit Card

Interest rate makes a different with your credit card payments. The lower the interest rate, the faster you’ll be able to pay off your balances and the less you’ll spend for the privilege of having a credit card. So how do you get a low interest rate on a credit card? There are a few approaches to consider.

1. Call and ask for a lower interest rate. Some credit card companies are receptive to customers requesting a lower interest rate, especially if they have made on time payments in the past or have a long history with the company as a good customer.
2. Open a new card with a low interest rate. Seek out a credit card with a low interest rate. Do your research to find the best cards with low interest rates. Then apply for the card. If approved, you can use the new card to replace your old one. You can even transfer existing balanced to take advantage of the lower interest rate.
3. Take advantage of low introductory offers. If a credit card is offering a low introductory offer, why not use it? Grab a new card with a zero percent introductory offer, use it to pay down debt very quickly and then stop using the card when the interest rate jumps up. What is a good APR for a credit card? Zero while it lasts!
4. Consider a credit union. Many credit unions offer credit cards with interest rates far below the typical banks.
5. Don’t carry a balance. The best strategy of all is to simply pay off your card every month. If you pay off your balance every month you’ll never pay interest and the interest rate won’t matter a bit. This is the perfect answer to discover what is a good APR for a credit card.