What is a good APR on a credit card? 

whats a good apr for a credit card

A good APR on a credit card is essentially any rate that works well with the account holder’s budget. Ideally, the lower the APR, the better. Lower APRs are usually reserved for consumers with higher credit scores, while consumers with poor credit may have to deal with higher interest rates and APRs. According to Forbes, about 191 million Americans have at least one credit card.1

If you plan on applying for a credit card, financial experts advise that you consider your options carefully. Pay close attention to the repayment terms before accepting any credit card offers. A high credit card APR can result in unnecessary financial struggles. 

Keep reading to understand credit card APRs and interest rates, and learn how you could secure a good APR.

What Is APR?

The annual percentage rate, often shortened to APR, is the cost of borrowing money for one year. Creditors use the APR to calculate the amount of interest owed. Fees are usually included in the APR, such as origination fees and processing fees. This is why the apr is usually higher than the interest rate

Borrowers pay the credit APR when you carry a balance from one billing cycle into the next. If you pay your card balance in full every month, you typically do not have to pay interest fees. If you have an outstanding balance, your monthly card statement will display your APR rate and the dollar amount you owe. 

If your card issuer charges fees, such as late fees, you may have to pay a higher penalty APR rate when you miss a payment. It’s essential to understand all the interest fees you will have to pay before applying for a new line of credit.

Understanding Credit Card APRs: A Comprehensive Overview

Historical APR Trends – Average credit card APR over the last 5 years.- Comparison with historical prime rates.
APR Comparison with Other Loan Types – Comparison of credit card APRs with mortgage, auto loan, and personal loan rates.- Explanation of why credit card APRs are typically higher.
Impact of APR on Different Spending Patterns– Scenario analysis showing cost implications of APR on low, moderate, and high spenders.-  Impact of carrying a balance vs. paying in full each month.
APR and Credit Card Rewards – Analysis of how rewards and benefits might offset higher APRs in some cases.- Break-even spending required to justify higher APRs for rewards cards.
Global APR Comparison– Average credit card APRs in different countries.- Factors influencing international APR variations.
APR and Credit Card Types– Comparison of APRs across different types of cards: secured, unsecured, rewards, balance transfer, etc.- How card features influence APR.
Credit Score Impact on APR– Average APR ranges for different credit score brackets.- How improving credit scores can lead to lower APRs.
Disclaimer: The information provided in the above chart is intended for general informational purposes only and should not be considered as financial advice. The data, including historical APR trends, comparisons with other loan types, and impact analyses, are based on generalized scenarios and may not reflect current market conditions or individual circumstances. APRs can vary widely based on a range of factors including creditworthiness, market dynamics, and specific lender policies. Consumers are advised to conduct thorough research and, if necessary, consult with financial professionals to understand how APRs apply to their unique financial situations. The chart does not guarantee the accuracy or applicability of any information in regard to your individual circumstances.

What Determines Credit Card APRs?

There is no basic APR for borrowers. When you apply for a new line of credit, issuers will run a credit check on you. A credit check allows the creditor to view your credit report and make a qualification decision. The APR offer you receive will depend on your current credit history. 

You should be aware of the five credit score ranges: 

  • Poor: 300-579
  • Fair: 580-669
  • Good: 670-739
  • Very Good: 740-799
  • Excellent: 800-850

Higher credit scores will help you get a good credit card APR. Most lenders prefer borrowers to have an excellent credit score, which is anything higher than 740. If you have a bad credit score, you may be ineligible for a line of credit or offered a high APR. The higher your APR, the more money you must pay when you borrow money. 

How to View My Credit Card APR

If you just got a new credit card or simply forgot your credit card’s APR, you can look at the Schumer box. The Schumer box is an easy-to-read summary box of your credit card interest rates and fees. A New York congressman named Chuck Schumer created the legislation that required financial institutions to provide a standardized display of interest rate information.

The Credit Card Act made changes to the Schumer box in 2009. Borrowers can now view the interest and fees charged if they pay only the minimum amount every month. This information must be clearly displayed on credit card statements. 

You can find a copy of the Schumer box through your online credit card account. Or you can find the cardholder agreement you received upon approval. 

Fixed-Rate APR vs. Variable Rate APR

There are two main types of APRs you should be aware of when applying for a credit card. You can choose between a fixed-rate APR or a variable rate APR. The kind of APR you choose determines how your repayment process will be. 

Fixed-rate APR

A fixed-rate APR is a static interest rate you pay when you carry a balance. The percentage rate does not change, so you always know how much you will have to pay. If your annual percentage rate is 20%, it stays that rate for as long as you keep your credit card.

Variable Rate APR

A variable rate is the direct opposite of a fixed rate. The percentage rate depends on the economic market. The federal prime interest rate may decrease during an economic recession, which means your APR is low! On the other hand, if the federal prime interest rate goes up, you are subject to high-interest rate fees. 

Should I Get a Fixed Rate or Variable Rate APR?

A variable interest rate is riskier than a fixed rate APR. Fixed-rate APRs make it easier to plan payments and keep track of your expenses. But on the other hand, variable rates could decrease, and you can pay less money in interest fees. Consider your current financial state and if you can afford the risk of variable rates. 

Additional Types of Credit Card APRs

 It’s essential to be aware of the different types of credit card APRs before applying with a creditor. Credit card companies enforce different APRs, so consider the following when comparing credit options. 

Introductory APR

Many credit card companies offer introductory APRs to attract new borrowers. This promotional benefit is either a reduced APR or a no-interest APR. The promotional period typically only lasts a few months, after which you will have to pay the regular APR rate.

Penalty APR

Penalty APRs offset the lending risk for creditors and incentivize borrowers to pay their monthly bills on time. You can expect to pay a penalty APR on your credit card balance when you do not meet the financial obligations of your card. A penalty APR is usually the highest interest rate you have to pay. 

These are a few financial actions that will trigger a penalty APR:

  • You miss a monthly payment
  • You exceed your credit limit
  • A payment bounces due to insufficient funds

If you manage a credit card wisely, you do not have to worry about paying a penalty APR. 

Cash Advance APR

The benefit of credit cards is that you can withdraw cash from an ATM. However, a cash advance APR will be applied to the money you withdraw. A cash advance APR can be high because you pay for the convenience of a cash advance. 

Balance Transfer APR

A balance transfer is a credit card transaction you make when you move a debit balance to a different account. Balance transfers may be beneficial if you have two credit cards and one offers lower interest rate fees. However, if you transfer your balance, you will be subject to the balance transfer APR and additional fees.  

Purchase APR

The purchase APR is the amount you pay for simply using your line of credit and having an outstanding balance. Remember that you do not have to pay your credit card’s APR rate if you pay during the grace period. It’s a good idea to use your line of credit only on expenses you can afford to pay immediately. 

What Is a Good Credit Card APR? 

A good credit card APR is any interest rate below the current national average. The average APR borrowers receive is 16.25%. The APR offer you receive depends on your credit report and the type of credit score you apply for. 

Rewards credit cards typically have higher APRs than basic credit cards. But the benefit of rewards credit cards is that you can get cashback or point rewards. If you have a bad credit score, know that you can work towards getting good credit card APRs. You can boost your credit score and avoid paying a high APR simply by paying your balance in full every month!

How To Calculate Your Credit Card Interest Rates

It’s essential that you know how to calculate the APR for a credit card. Calculating the APR is pretty straightforward, but you will need your credit card statement and a calculator. 

Step 1: Find Your APR

Take a look at your credit card statement and find your APR rate. It is usually located towards the bottom of your statement. If you can’t find your APR rate, you can find a copy of the Schumer box online. 

Step 2: Multiply Your Credit Card Balance by the APR

You can calculate the amount you owe annually by multiplying your APR rate by your credit card debt balance. If your APR for a credit card is 20% and your outstanding balance is $3,000, then the amount you owe in interest fees for the year is $600. 

Step 3: Calculate Your Monthly Payment Amount

You can also calculate the monthly amount you owe in interest fees. Divide your APR amount by twelve to find your monthly payment amount. If you owe a creditor $600 for an entire year, you will owe $50 a month.

How To Improve Your Credit for Low-interest Credit Cards?

If you want a good APR, you will need to work on improving your bad credit. Improving your credit score is easy once you know how the three major credit bureaus analyze financial data. By changing your financial habits and organizing your finances, you could quickly start to improve a bad credit score.

A credit score is determined through the calculation of five categories, as shown below. 

Payment History

Your payment history accounts for 35% of your credit score. This is the most critical factor to consider when you want to improve your credit score. Consider signing up for automatic payments to avoid missing payments. You can also add payment reminders to your phone calendar if you prefer to pay bills manually. 

Total Debt

Your total debt makes up 30% of your credit score. The more debt you have, the lower your credit score will be. Having a high debt to credit ratio can make you look financially irresponsible. Ideally, you should not use more than 30% of your available credit. If you have $10,000 available through multiple credit cards, you should not use more than $3,000. According to news outlet CNBC, the average American has at least four credit cards.2 

Length of Credit History

This is the only credit score factor you cannot actively improve. The length of your credit history accounts for 15% of your credit score. The longer you manage your financial accounts, the better your credit score will be. 

New Credit Inquiries 

Credit inquiries account for 10% of your credit score. Inquiring for too many credit cards or loans every year can decrease your credit score. When applying for financial support, the creditor performs a hard credit check. If your credit report is pulled too often, you may appear financially impulsive on paper. Ideally, you should not apply for more than six credit accounts within one calendar year. 

Credit Mix

Having a variety of debt can look good on your credit report. Credit mix accounts for 10% of your credit score. Creditors like to see borrowers successfully manage different credit accounts. Ideally, you should have both revolving credit and installment loans. Credit cards are considered revolving credit since credit is automatically renewed once you pay your debt. Installment loans include but are not limited to mortgage loans, auto loans, payday loans and online no credit check loans.

FAQ: APRs and Credit Cards

Can I negotiate or lower my APR?

Yes, you can negotiate to lower your card’s APR. Contact your credit card issuer and request a lower rate, especially if you have a good payment history or improved credit score. Mention any competitive offers you’ve received from other companies as leverage.

What are some strategies to obtain a lower APR on a personal line of credit?

To obtain a lower APR, maintain a good credit score, make credit card payments on time, and reduce your debt-to-income ratio. Regularly compare APRs to find better deals and consider transferring your balance to a card with a lower APR. Negotiating with your current credit card issuer can also be effective.

How can I find credit cards with low APR offers?

To find credit cards with low APR offers, start by researching and comparing offers from various banks and credit unions. Online financial platforms and comparison websites are useful for comparing different APRs. Look for promotional low APR offers, especially for balance transfers.

How does APR affect card payments?

APR directly impacts the amount of interest charges you’ll incur on your balance. A higher APR means higher interest charges on unpaid balances, increasing the overall cost of any purchases made on credit. This is particularly important for cash advances, which often have higher APRs.

How does someone qualify for a low APR?

To qualify for a low APR, you typically need a good to excellent credit score, a stable income, and a low debt-to-income ratio. Credit unions often offer cards with competitive rates to their members. Building a strong financial history by paying bills on time and keeping debt low is crucial.

How does the line of credit type (e.g., rewards vs. student) affect the APR?

The type of line of credit can significantly affect the APR. Rewards cards often have higher APRs compared to basic cards due to the benefits they offer. Student credit cards might have lower APRs but limited credit limits and rewards, reflecting the typically lower credit of students.

Who sets the maximum APR allowed on credit cards?

The maximum APR on credit cards is often regulated by state laws and federal regulations. However, there is no universal cap on interest rates for credit cards. Banks and credit card issuers set their APRs based on market conditions, the borrower’s creditworthiness, and regulatory guidelines.

Who should be concerned about variable APRs on credit cards?

Individuals who carry a balance on their credit cards should be particularly concerned about variable APRs. These rates can fluctuate based on the prime rate, potentially increasing interest charges unexpectedly. Those who prefer predictable payments might opt for fixed-rate cards instead.

What should I consider when comparing APRs on different credit cards?

When comparing APRs on different credit cards, consider the type of APR (fixed vs. variable), any introductory offers, the regular APR after the promotional period, and APRs for specific transactions like purchases, balance transfers, and cash advances. Also, factor in annual fees, rewards, and other card features that might offset interest charges.

A Word From CreditNinja on Credit Card Interest Rates and APRs 

Credit cards are useful financial tools that allow you to take advantage of online features. You can make online transactions, send electronic payments, and more. While it’s possible to order online without a credit card, it’s not always convenient. 

If you are interested in applying for a line of credit, CreditNinja encourages you to carefully consider the APR for a credit card before inquiring. Having a good credit score can help you get a good APR. If you have a bad credit score, your credit card offers may have a high APR rate. However, remember that you do not have to pay the APR rate if you pay your balance in full by the end of the billing cycle. 

To help build your credit, you can try applying for secured credit cards. Secured credit cards work the same as unsecured credit cards. Your credit limit will depend on how much money you use as a deposit. You may eventually qualify for a rewards credit card by successfully managing your secured credit card or platinum credit card.

Want to learn more about lines of credit, handling your finances wisely, and more? Be sure to check out the CreditNinja dojo! 


  1. Credit Card Statistics And Trends 2023 | Forbes Advisor
  2. How many credit cards does the average American have? | CNBC
  3. What Is APR? Understanding How APR Works | Master Class
  4. What Is APR and How Does It Affect Me? | Experian
Read More
how to switch credit cards
Borrowers can switch credit cards by applying for new credit products and closing their current account. Applying for a new card with the same creditor…
Best Memorial Day Sales
Memorial Day weekend is a prime time to shop for basic necessities and big-ticket items. Most stores are already advertising Memorial Day deals on all…
someone opened a credit card in my name
If you notice that someone opened a credit card in your name, you will need to report the fraudulent transactions or accounts to the credit…
non conforming vs conforming loan
Between conforming and non-conforming loans, the best home loan for you depends on a lot of factors. Before you apply for any type of mortgage,…

Quick And Easy Personal Loans Up To $2500*