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What’s a Good APR for a Credit Card [And How To Get It]

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Christy Rodriguez
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Christy Rodriguez

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After having “non-rev” privileges with Southwest Airlines, Christy dove into the world of points and miles so she could continue traveling for free. Her other passion is personal finance, and is a cer...
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In an ideal world, APR wouldn’t matter because we would pay off our credit card balance each month. Unfortunately, many of us aren’t doing so. According to the Federal Reserve, in 2022, 40% of Americans with a credit card carried a balance.

Since your APR determines how much you’ll pay in interest, finding a credit card with a good APR is extremely important.

But, what is a good APR? And how do you ensure you’re qualifying for the best rate you can get? Let’s find out!

What Is an APR?

Each credit card has an APR (or annual percentage rate), but what is that? The APR is the rate at which interest is charged if you don’t pay off your credit card in full each month. It’s basically the cost of borrowing money from your card issuer. APRs can be fixed or variable, low or high, but in short, the lower your card’s APR, the less you’ll potentially spend in interest!

If you’re not sure what your card’s APR is, you can find it listed on your credit card statement, in the card’s terms and conditions, or on your card issuer’s website. Card issuers are legally required to state the APR, but it may take a little digging on your part!

It gets confusing, though, since APR is an “annualized” term even though interest can be compounded daily. Unfortunately, you can’t just multiply the amount you want to borrow by the APR to figure out how much you’ll pay. However, it is the easiest way to compare multiple products since all are required to disclose this information.

Bottom Line:

When carrying a balance on your credit card (which you should avoid when possible), the lower the APR, the better. This means you’ll owe less to your credit card company.

Types of Credit Card APRs

The most common type of APR is the purchase APR, but you might notice other kinds of APRs noted in the card’s terms and conditions. Depending on how you’re planning to use your credit card, these could be important to know!

Purchase APR

This APR applies to any balance that is carried forward from one month’s bill to the next. If you don’t pay your statement balance in full each month, the purchase APR will be the rate at which interest fees are accrued. People normally refer to this type of APR when they mention a credit card’s APR.

Introductory APR

The introductory, or promotional, APR is usually offered for a fixed time period (anywhere from 6 to 24 months) and could be as low as 0%. This low APR normally applies to purchases and balance transfers. After this period is over, the card’s APR will change to an APR that is dependent on your credit.

Balance Transfer APR

A balance transfer involves transferring debt from one location — usually with a high APR — to another card account, usually with a low or zero APR. A balance transfer can be a good way to consolidate debt or eliminate/lower interest payments.

Cash Advance APR

Unfortunately, using your credit card to take out cash from an ATM isn’t treated the same way as using your debit card. When you take our cash with your credit card, it is treated as a cash advance — and it can cost you! The cash advance APR can be up to 30% (in addition to cash advance fees). Avoid doing this if you can!

Penalty APR

If you make a late payment, you spend over your credit limit, or your payment can’t be processed due to insufficient funds or a closed account, you can get hit with a penalty APR that can be close to 30%.

What Is a Good Credit Card APR?

According to the Federal Reserve, the average APR is currently just below 21%, so if you’re APR is lower than that, this means you have a good APR. This has been a huge increase in the past few years (2018’s average was a little over 14%!), so what is considered a “good APR” definitely changes depending on when you’re asking!

The very best APR you can get is 0%, though this is usually only a promotional APR for a short period of time (like 12 months, for example). But keep in mind, if you’re not carrying a balance, APR is not even relevant!

Ultimately, what is considered good will be based on what the national average is as well as your credit score. For example, a good APR for someone with lower credit will almost always be higher than a good APR for someone with excellent credit.

Comparing Credit Card APRs

Using the Federal Reserve’s average rate as a baseline of comparison is a great place to start. Next, know that credit cards typically offer a range of interest rates, with the best rates being offered to those with good or excellent credit. For example, the Chase Sapphire Preferred® Card offers 21.49%-28.49% Variable APR, depending on your credit rating.

It’s hard to know exactly what rate you’ll be offered before you apply, but by looking at the ranges and knowing your credit score, you should have a good idea of where you might land.

Does the Type of Card Determine the APR?

The type of card definitely affects what APR is offered. For example, store cards often have the highest APRs, cash-back cards usually have lower APRs, and travel and rewards cards generally fall somewhere in the middle. In addition, unsecured cards generally have a higher APR than secured cards.

Basically, the more a card offers (think no annual fees, rewards, or other perks), the higher the APR. Cards, such as store cards, that are offered to those with lower credit scores, also charge higher APRs.

The lowest APRs are offered to the cards with the least bells and whistles and are given to those with the least risk (meaning those with good to excellent credit).

Hot Tip:

If finding a credit card with a low APR is the most important factor to you, you might need to expand your range. This is because cards with the lowest rates often come from credit unions as opposed to major banks.

How To Qualify for a Credit Card With a Good APR

Person holding a smartphone with good credit score meter on the screen
Image Credit: Backcountry Media via Adobe Stock

The best way to qualify for the lowest APR is to work on improving your credit score. While there are credit cards that are meant to be used by people with bad or fair credit, these cards will generally have higher APRs. You will only qualify for the best APRs if you have good or excellent credit.

Here are some quick tips to increase your credit score:

Can You Negotiate a Lower APR?

The good news is that your credit card’s APR is absolutely negotiable! Reach out to your card issuer and see if there is anything they can do to lower your APR.

Things to mention when requesting a lower APR include:

  • Your credit score has improved
  • You’ve had your credit card for longer than 6 months (but the longer, the better!)
  • You’re in a tough financial situation and need some help

Customers who have a record of on-time payments and have had their card for a long time have the highest chance of success, but you really have nothing to lose by asking!

Final Thoughts

If you’re like a good portion of Americans, you’ll carry a balance on your credit card at some point. Finding the best possible APR is important to keep interest costs to a minimum. Increasing your credit score will help you qualify for the best APRs, but you can always call your credit card company to see if they can lower your APR as well.

Frequently Asked Questions

What is a good APR for a first credit card?

If you’re trying to get your first credit card, you might not have had time to build up your credit score yet. This means you might have to accept a credit card with a higher APR. Using the Federal Reserve’s average as a baseline APR is always a good start, so anything that falls at or below this average can be considered a good APR for a credit card.

What is a good APR for a secured credit card?

Secured credit cards generally offer lower APRs since your debt is literally secured by a deposit. There isn’t a ton of risk to the lenders, so they can offer competitive APRs on these credit cards.

At the same time, secured cards are generally a way for those with fair or poor credit to rebuild. Because of this, what is considered a “good” APR is dependent on what type of credit score you have.

What is a good APR for a student credit card?

When applying for a credit card, know that what is considered a “good” APR is generally anything that falls at or below the Federal Reserve’s average (around 21% in 2023). If you qualify for a credit card with this APR, you’re in great shape!

What is a good APR for a credit card if you have bad credit?

Unfortunately, there’s no set rate that is considered “good,” regardless of your credit history. Generally, those with bad credit will be offered a higher APR (up to 30%) than those with good to excellent credit.

APRs that are offered vary over time, so what is considered “good” will also vary. Currently, the Federal Reserve has an average APR of around 21%. This, along with factoring in your bad credit, will determine what you’re offered by credit card companies.

What is a good purchase APR for a credit card?

Any purchase APR at or below the Federal Reserve’s average (currently around 21% in 2023) is considered good. Your credit history will also factor in with only those with good to excellent credit being offered the best rates. APRs offered will increase as your credit score decreases.

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About Christy Rodriguez

After having “non-rev” privileges with Southwest Airlines, Christy dove into the world of points and miles so she could continue traveling for free. Her other passion is personal finance, and is a certified CPA.

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