Female customer hands store clerk her credit card

What is a Good Credit Card APR?

Last Updated: July 25, 2024

5 min read

Table of contents

Key points:

APR stands for Annual Percentage Rate and refers to the interest rate on your credit card.
A good credit card APR for you depends on many factors, including if you typically carry a balance month to month or pay the full balance before the due date.
Your credit score may affect the credit card APR you’re offered.

When you’re choosing a credit card, one factor that may influence your decision is the card’s Annual Percentage Rate (APR)—otherwise known as the interest rate.

If you know you’ll be carrying a credit card balance over multiple billing cycles, a low APR is important because it represents the amount of interest you must pay on your credit card debt.

On the other hand, if you pay your credit card bill in full and on time each month (and don’t anticipate any major purchases you can’t pay off in one billing cycle), the interest rate might not be the most important factor when choosing a card. Still, it’s helpful to understand how you know if you have a good interest rate.

What is the average credit card interest rate?

When it comes to credit card interest rates, lower is better. But what is the average? The Board of Governors of the Federal Reserve System (which provides consumer credit data), in their monthly consumer credit report, showed an average credit card interest rate of 20.90% (22.15% for accounts assessed interest) for year 2023.

Ultimately, whether or not you receive a good interest rate depends a lot on you: your spending habits, your debts, and your ability to make your monthly payment on your credit card. Understanding how credit card interest rates work can help you be a better credit consumer.

What determines your credit card APR?

Your credit card’s interest rate is determined by a variety of factors, some of which are within your control and some of which aren’t.

Lenders offer different interest rates, so it helps to shop around to see which rates are the most attractive to you. If you don’t carry a balance and earning rewards is important to you, a higher interest rate could be worth it.

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Your credit score also affects the interest rate offered to you. This is the part you have some control over. If you want to be offered different types of credit cards with more attractive features and interest rates, aim to raise your credit score to the good or excellent range.

Also, read the fine print when you apply for a credit card, and again as you review your credit card statements. Most credit card interest rates can vary when the prime rate adjusts. The prime interest rate helps financial institutions determine how much interest to charge borrowers.

What to expect from a credit card with a high APR

While your credit score may impact the interest rates you qualify for, some credit cards are also more likely to charge higher rates.

Credit cards with extensive rewards programs or elite perks may charge more interest. If you’re looking for a card with a long list of features, you may pay more in interest. By repaying your balance in full each month, you can still avoid interest fees on a high-APR credit card. However, if you do carry a balance, it’s a good idea to make sure your interest charges don’t offset the value of your rewards.

What to expect from a credit card with a low APR

If you have a high credit score, you might qualify for a lower APR credit card. There may be a trade-off, as low APR credit cards don’t always come with as many rewards or perks. However, if you typically carry a balance from month to month, a credit card with a lower APR could benefit you more than a card with extensive rewards.

Tips to lower your credit card APR

When you’re looking for a new card, it can pay to shop around to identify a good interest rate. Some lenders may offer you a 0% introductory interest rate, which will last for a specified amount of time, giving you a chance to pay off a balance without owing interest. Others offer reward bonuses or discounts with certain retailers.

Did you know?

If you have high interest on credit card debt, you may be able to transfer your balance to a credit card with a low intro APR on balance transfers and purchases. This may help you consolidate monthly credit card payments and save money on credit card interest.

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If you pay your credit card bill in full and on time every month, then the interest rate on your credit card matters less. Why? Because as long as you pay your credit card balance in full by the due date, you won’t be charged interest on purchases or pay any late fees. If this is how you use your credit card, then you should shop for a card with the best rewards rather than the lowest rate.

How to qualify for a better credit card APR

If you do carry a balance, as many credit card users do, try to pay more than the minimum monthly payment. If you’ve established a long history of using your card responsibly, it may be possible to get a lower interest rate from your lender.

Generally, practicing responsible credit card habits can help you build your credit score. That means making on-time payments and limiting your credit utilization ratio, among other things. A higher credit score could help you qualify for a lower APR.

However, keep in mind that all credit card issuers and lenders have different requirements for cardmembers, and even a good credit history doesn’t guarantee you’ll receive a good interest rate.

You can also ask for a credit limit increase, which—if you don’t use this as a chance to spend more—can lower your credit utilization ratio and help boost your credit score. When in doubt, see what your credit card company can offer you.

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