What is a good APR for a credit card?
If you’re relatively new to the world of credit cards — or even if you’re not — you probably have a few questions about an important concept: Annual percentage rate, or APR.
In the simplest terms, APR represents the annual cost you pay to borrow money from a lender or credit card issuer. It’s the interest rate you pay on a credit card — but only if you don’t pay your card balance by the end of the government-mandated “grace period” (at least 21 days, by law).
So what’s a good credit card APR? And how can you avoid paying it or find credit cards with a low or even zero percent APR?
What is a good credit card APR?
As of February 2024, the average credit card interest rate is 24.61%. This average is based on 200 of the most popular credit cards in the U.S., as tracked by Lending Tree. So, in relative terms, any APR that’s lower than the average might be considered a good credit card APR.
If you’re looking for a credit card with a low APR option, you’ll want to check out TPG’s list of the best 0% APR and low-interest credit cards. These cards offer a 0% introductory APR to new cardholders on purchases for a limited time. This makes them an ideal solution if you have a large, upcoming purchase to make.
Lowering your APR on a card
Generally speaking, low-APR credit cards usually require you to have a good credit score — around 690 or higher — to qualify. They also offer fewer perks and benefits than high-APR premium cards. Assuming you have a reasonably good credit score, it all boils down to what you want from a credit card — a low APR and minimal rewards or a higher APR and lavish perks.
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If you’re looking to create or rebuild your credit history, you’ll want to start off with a secured credit card to build trust with credit issuers.
Some cards have what’s called a variable APR, meaning an APR that goes up or down based on your credit score and payment history. The easiest way to lower your APR is to pay off your balance in full each month. Also, lower your credit utilization (meaning don’t use more than 30% of your available credit) and avoid applying for several credit cards at once. All these actions will increase your credit score.
Bottom line
In an ideal world — if you’re following TPG’s 10 commandments of credit card rewards — you won’t pay interest on any of your cards, so APR is a non-starter.
But if you follow these tips and prioritize applying for low- and zero-APR cards, you can minimize the stress of having to pay high credit card interest rates.
