Credit Cards: What’s a Good Interest Rate?

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What does APR mean? 

People often use the terms APR and interest rate interchangeably. In fact, while they are closely related, April and interest rates are not exactly the same Credit Cards.

APR is expressed as a percentage that shows how much you will pay on borrowings over a year. Unlike standard rates, APR also includes fees that may be charged to your account.

Credit card APRs are charged differently than interest on other types of financing. You can usually avoid paying credit card interest as long as you pay off your balance by the monthly due date.

What is a good credit card?

Credit card interest rates have been trending upwards over the past few years. At the end of the first quarter of 2020, the average interest rate on credit card accounts assessed for interest was 16.61%, according to the Federal Reserve. That compares with an average unemployment rate of 16.91% in the same period last year. 1 

The April rate range offered on credit cards varies based on several factors, and you won’t know the actual rate until you’ve been approved. Depending on your credit status, you may not be eligible for the lowest advertised price.

APR can also vary depending on the type of account you’re looking for. Here are the average APRs currently offered by each card type as of July 15, 2020, according to the credit card site’s weekly rate report :

  • Low-interest card: 12.83%
  • Cashback Card: 16.09%
  • Business cards: 13.91%
  • Debit card balance: 13.93%
  • Reward Card: 15.82%
  • Credit cards for people with bad credit: 24,43%

No matter where your interest rates start, it’s important to understand that most credit cards have variable ADRs, which can change over time. Variable APR may increase or decrease based on one of three factors: market, index, or U.S. prime rate.


The APR on your credit card usually only works if you cycle through the outstanding balance on your account month-to-month.

Lower APR

Getting a lower APR is important for those who recycle their balances on their credit cards. An April that’s just two percentage points higher could cost you more than $135 a year in additional interest.

Here are a few tips that might help you get a lower APR credit card.

  • Work to improve your credit score
  • Search your local credit union or small bank for low-interest card offers

Credit card companies don’t usually promise which credit scores might get you the lowest APR, but according to Credit, a very good to very good credit score is anything higher than the mid-70s. Fair to good is considered mid-600s to mid-700s, but that might not be enough to get you the best deal.

what to look for on a credit card

If you follow credit card best practices, you’ll pay off the balance in full each month to avoid paying interest. If you have a good track record of paying your full monthly balance, April may not be the most important factor to consider when you buy a new credit card. Instead, you might want to compare the following:

annual fee

The annual fee seems like something you want to avoid, but it’s not necessarily a deal-breaker. For example, some premium rewards cards offer benefits, points, and rewards that go well beyond their annual fee if you can afford to take advantage of them. Only you can decide whether the annual fee is worth the benefits you get.

Incentives and Signing Bonuses

If your credit goes from good to good, you can qualify for attractive rewards and even sign-up bonuses on new credit card accounts. Remember, you shouldn’t overspend in pursuit of credit card rewards. However, if you manage a rewards card responsibly, you can earn extra perks for your everyday spending.


When it comes to your credit card limit, the higher it is, the better for you, as long as you exercise caution while spending. Of course, you don’t know if you’re eligible for a credit card’s maximum advertised limit until you’re approved. Having a high limit shouldn’t be a license overrun. Conversely, if a cap card helps you keep your credit, then it’s beneficial for credit utilization at a lower level – plus your credit score.

Beverly Harzog, credit card expert and consumer finance analyst at USNews & World Report, says that the most important thing to do before researching a credit card is to “determine which one you’re looking for” type of card.” She continued, “If you want a new rewards card, think about your spending patterns so you can match your rewards to how you spend your money.”

Be honest with yourself

Credit cards can offer excellent benefits when managed properly. Credit card accounts can be a powerful credit-building tool if you keep your payment timing and your credit utilization low. Plus, there’s nothing like earning rewards or cashback for the things you need to buy.

That said, it’s important to understand your credit card management habits. In 2019, 37 percent of U.S. households had a revolving balance, according to the credit card website. If you’ve struggled with credit card debt in the past, the APR size for your new credit card can be very important Learn More

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