Why is it important to consider the APR when comparing credit card offers?

When comparing credit card offers, you need to look at the APR because it affects how much you pay in interest if you carry forward balances from month to month.

Can you ask for a review of your APR to go down on a credit card?

You might request a lower APR on your credit card if you’ve maintained the card for a considerable time and have a good payment history.

Is it wise to apply for a high APR credit card to boost your credit score?

You might benefit by getting a high APR credit card to boost your credit score provided you maintain responsible financial habits. This requires making your payments on time and keeping your credit utilization ratio low.

Does APR matter if you pay on time?

If you pay off your outstanding balances in full each month, the APR does not matter. However, if you make just the minimum payment on time, interest charges will apply.

Does APR matter if you pay in full?

The APR does not matter if you pay your credit card bill in full each month.

Do you want a high or low APR on credit cards?

Unless you want specific features in the card, you should prefer [getting cards with low APRs](https://www.moneygeek.com/credit-cards/low-interest/).

What is a high APR for a credit card?

You may view any credit card APR that is above the existing average as high.

What is the average APR for a credit card?

In May 2021, the average APR for credit card accounts that assessed interest was 16.30%.

What is a bad APR for a credit card?

You may view any credit card APR that is below the current average APR as less-than-favorable.

Can a store credit card raise the APR for any reason?

A credit card provider may increase the APR if there’s an increase in the prime rate, if there is reason to apply a penalty APR, if a promotional period comes to an end, if there is a significant drop in your credit score or if you’ve maintained your account for more than 12 months. In the last scenario, your card provider needs to notify you of the same at least 45 days in advance.

Is it true that military members only have to pay 8% APR for credit cards?

The Servicemembers Civil Relief Act (SCRA) gives military service members the means to bring down the interest rate of credit they took before entering active duty military service to 6%. It does not apply to credit they get after joining.

What Is a Good APR for a Credit Card?

A good APR for a credit card is one that’s below the current average.

Advertising & Editorial DisclosureLast Updated: 11/18/2022

Edited By

Erika Hearthway

Written By

Rajiv Baniwal

Reviewed By

Brett Holzhauer

The content on this page is accurate as of the posting date; however, some of the offers mentioned may have expired.

Data released by the Federal Reserve suggests that the average credit card APR across all accounts was 14.61% in May 2021, and it stood at 16.30% for accounts that assessed interest. A good credit card APR as of now is one that falls below these numbers.

If a credit card has a higher-than-average APR and you carry forward balances from month to month, you stand paying more as interest charges over time. However, you might be able to offset a card’s high APR by making use of its rewards program, bonuses and additional perks.

Once you know how credit card interest works, you will find yourself better positioned to select a suitable card.

MoneyGeek's Takeaway

The higher your credit score, the lower the APR on a credit card you stand to get.

Different APRs tend to apply on purchases, balance transfers and cash advances.

Exorbitant penalty APRs may apply in cases of late and returned payments.

What Is a Good Credit Card APR?

What qualifies as a good APR for credit cards depends on your creditworthiness. This is because credit card providers look at your credit score before deciding what APR to apply on your card.

If you have an excellent credit score, you might benefit by getting a low APR. On the other hand, people with poor to average credit scores tend to get high APRs. Let's take the Chase Sapphire Preferred Card credit card as an example. It currently comes with a variable APR of 15.99% to 22.99%. This means that the better your credit score, the lower the APR you might be able to get.

One way to get a credit card with a good APR is to improve your credit score. Ways to do this include:

Fixing errors on your credit reports
Paying your bills on time
Reducing your credit utilization ratio
Minimizing applications for new credit
Keeping older accounts active
Overriding the effects that come with a thin credit file

Average Interest Rates (APRs) by Credit Score

Your credit score may play a significant role in the APR that applies to your credit card. While APRs are good indicators of card providers’ pricing models, effective interest rates serve as more accurate measures because they also take into account the impact of cash advances and time-bound promotional offers.

Data released by the Bureau of Financial Protection surrounding consumer credit cards shows that cardholders in the deep subprime category pay the highest effective interest rates, and the reverse holds true as well. The corresponding table shows numbers from 2018.

Average Effective Interest Rates by Credit Score

Category
Interest Rate
Super Prime (720 or higher)
13.5%
Prime (660 to 719)
16.5%
Near Prime (620 to 659)
19%
Subprime (580 to 619)
20.5%
Deep Subprime (579 or lower)
21%

The overall effective interest rate across all credit score categories during the same period was 15.6%.

>> MORE: How Does Credit Card Interest (APR) Work?

How to Compare Credit Card APRs and APR Offers

Credit card APRs can vary considerably based not just on your credit score but also on the type of transaction. For instance, your credit card may have different APRs for purchases, balance transfers and cash advances. The APR on cash advances is typically the highest. Some cards come with 0% intro APR offers on purchases and balance transfers. You also need to account for any possible penalty APR that comes into effect in cases of late and returned payments.

Consider these examples to see how APRs vary across categories. All the APRs listed here are variable and subject to change.

Blue Cash Preferred Card from American Express

Purchase APR - 13.99% to 23.99%
Balance transfer APR - N/A
Cash advance APR - 25.24%
Penalty APR - 29.99%

Chase Sapphire Preferred Card Credit Card

Purchase APR - 15.99% to 22.99%
Balance transfer APR - 15.99% to 22.99%
Cash advance APR - 24.99%
Penalty APR - Up to 29.99%

U.S. Bank Visa® Platinum Card

Purchase APR - 14.49% to 24.49%
Balance transfer APR - 14.49% to 24.49%
Cash advance APR - 25.99%
Penalty APR - N/A

Simmons Visa® Card

Purchase APR - 8.25%
Balance transfer APR - 8.25%
Cash advance APR - 12.25%
Penalty APR - N/A

What to Expect with Better Interest Rates

What to Expect From Cards With Low APRs

Most low-interest credit cards offer little in terms of additional features. However, these cards allow you to save money if you plan to keep revolving balances in your accounts. If you get a card with a 0% APR offer, you get to pay no interest on outstanding balances during the promotional period. This may apply to purchases and balance transfers, typically from 12 to 18 months.

If you plan to pay your balances in full each month, you might be better off looking for a card that comes with added perks.

What to Expect From Cards With High APRs

You might need to pay a high APR if you have poor creditworthiness or if you’re looking for a premium card. In the case of the former, your card might come with a high APR and still not offer additional benefits.

Premium cards that come with high APRs provide different types of benefits. These may include high reward rates, travel credits, airport lounge access, priority boarding, purchase protection and travel insurance.

If you plan to keep a revolving balance in your account from one month to the next, getting a card with a high APR might not work well for you as you could end up paying a tidy sum as interest over time.

MONEYGEEK EXPERT TIP

"The most effective way to earn credit card rewards is to avoid paying any interest or fees. If you are able to not pay any fees and put as much spending on your credit card as possible, you are effectively practicing “credit card hacking.”" — Brett Holzhauer, Credit Card Journalist

What You Need to Qualify for Good APR Credit Cards

Not all credit card providers use the same criteria when deciding what APRs to apply. However, you may improve your credit score, and thereby your chances of getting a good APR, by following some basic measures.

Timely payments
Steer clear of defaulting and make all your payments on time (including utility payments).
Past due accounts
Catch up on any past due accounts.
Pay down balances.
Start by reducing outstanding amounts of accounts that charge high interest.
Credit utilization
Keep your credit utilization ratio below 30%.
Credit applications
Do not apply for credit in quick succession — you should ideally wait for six months between applications.

>> MORE: Compare Low-Interest Credit Card Offers Provided By Our Partners

Other Questions You May Have About Good Credit Card APR

Next Steps

Now that you know how APRs may vary based on credit scores and the additional perks that come with a credit card, look for a card with a good APR based on your specific requirements. If you plan to make your payments in full every month, you may even consider getting a card with a high APR. In any scenario, make sure you compare your options based on other features as well.

Compare & Review Credit Cards

MoneyGeek simplifies how readers look for credit cards that best suit their financial goals and spending habits. To provide the best information, our experts review and analyze the spending trends of students based on data provided by the Bureau of Labor Statistics (BLS). We also stay up-to-date on the offers, rates and fees of more than 80 student credit cards.

View All Credit Cards

Learn More About Credit Cards

The MoneyGeek editorial team is continually reading up on the latest trends and news that surround the world of credit cards. It does this with the aim of responding to reader queries efficiently and in a timely manner. If you have any questions about credit cards, you can count on our team to provide the right answers.

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About the Author

Rajiv Baniwal has been writing about different financial topics for over 15 years. Meticulous in his research, he makes sure he provides accurate and up-to-date information. His areas of expertise include mortgages, personal loans, credit cards, insurance and international money transfers.

sources

The Federal Reserve. "Consumer Credit - G.19." Accessed August 19, 2021.
Experian. "What Can Increase Your Credit Card’s APR?." Accessed August 19, 2021.
U.S. Department of Justice. "The Servicemembers Civil Relief Act (SCRA)." Accessed August 19, 2021.
Bureau of Financial Protection. "The Consumer Credit Card Market." Accessed August 20, 2021.

*Rates, fees or bonuses may vary or include specific stipulations. The content on this page is accurate as of the posting/last updated date; however, some of the offers mentioned may have expired. We recommend visiting the card issuer’s website for the most up-to-date information available.
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