Why Your Credit Card's APR Shouldn't Matter

by Lyle Daly | Updated Sept. 16, 2021 - First published on Sept. 25, 2020

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A smiling woman handing her credit card for payment while seated at an outdoor cafe table.

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Don't let a common misconception convince you to pick the wrong credit card.

If you've ever read about things you should look at before you apply for a credit card, there's a good chance APR was on the list. This popular piece of advice seems logical enough. A credit card's APR is its interest rate, and the card issuer can charge you that rate on any balance you don't pay off by the due date.

But as smart as this advice sounds, it's completely wrong. APR isn't a factor to look at when you're credit card shopping, unless you specifically want a 0% intro APR card. Don't apply for the wrong credit card based on bad information, find out instead why a credit card's APR shouldn't matter.

Why a credit card's APR is irrelevant

A credit card's APR isn't an important feature because you should never pay any credit card interest. And if you're never getting charged interest, then it doesn't matter what your card's interest rate is.

The smartest way to use credit cards is to pay off your entire statement balance every month by the due date. It doesn't make sense to carry a balance because your purchases will cost more after your card issuer tacks on interest charges. And if you want to finance a large expense, it's better to go with either a loan or a 0% intro APR card. A loan will have fixed payments and should also have a lower interest rate.

The main problem with using APR to pick a credit card is that you could choose a less valuable card solely because of its interest rate. Imagine you're comparing two rewards credit cards with these features:

  • A 9.99% APR and 1% cash back on purchases
  • A 19.99% APR and 2% cash back on purchases

The first card may have a much lower APR, but it will earn you half as much in rewards. If you're confident you'll always pay your full credit card bill, there's no reason to go with that first card.

The exception to the rule

There is one situation where credit card APR matters, and that's if you're shopping for a 0% intro APR card. These cards have a 0% intro APR on purchases, balance transfers, or both. The 0% intro APR lasts until the end of the intro period, and then the card's standard APR applies going forward.

In this case, you should check that the 0% intro APR applies to the right type of transaction. If you want to pay off big purchases over several months or more, then you'll need a credit card with a 0% intro APR on purchases. If you have debt that you want to refinance and pay off at a lower interest rate, you'll need to shop for balance transfer credit cards that get you a 0% intro APR on balances you transfer.

Don't focus on credit card APR

APR is certainly important when you're shopping for a personal loan or a mortgage because you'll pay interest on those no matter what. The same isn't true with a credit card. You can and should avoid credit card interest.

If you're able to do that, you can ignore the card's APR. Instead, the best credit cards have many more valuable features you can compare to figure out which one will save you the most money.

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