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Your credit card APR depends on several factors, including your credit score and the type of credit card. The average credit card interest rate -- usually expressed as the annual percentage rate or APR -- for cardholders carrying a balance is more than 24%, according to LendingTree. But that isn't necessarily a good APR for a credit card, especially considering that the Federal Reserve interest rate is at historic lows.
So, what is an annual percentage rate? It's your card's finance charge expressed annually. This number is typically the biggest deciding factor in how much it will cost you to carry a balance on your credit card, making it important to know and understand.
Even more importantly, though, you should be asking: What is a good interest rate? And am I getting the interest rate I deserve? Read on to find out what your credit card interest rates should look like and how to get them lower.
Credit card APRs are usually variable, and are directly tied to the Federal Reserve's benchmark interest rates. So, a "good" APR depends on the overall financial conditions at any given time.
Having said that, as of mid 2023, you could consider a good APR for a credit card to be anything below the average of 24.24%% -- if you have good credit. If you have excellent credit, you could qualify for an even better rate, but according to the same LendingTree report, the lowest APRs on new credit card offers is 13.82%. But that's on cards whose focus is low interest. The lowest APR on rewards cards as of July 2023 is about 20.6%, and the lowest on cards offering 0% intro APR balance transfers is about 18.5%, just for context.
If you have bad credit, the best credit card APR available to you could be well above 25%. Secured credit cards for building credit have a credit card APR of about 27% on average.
The highest credit card interest rates are usually found on:
Those with the lowest APRs tend to be low-interest credit cards and credit cards from credit unions. Some of the best low interest credit cards have a credit card APR range starting at about 14%. Many popular credit unions offer credit cards with interest rates that start significantly lower for their most creditworthy members.
READ MORE: Best Low Interest Credit Cards
For context, the average credit card APR across all credit card types ranges from 18.11% to 25.34% as of July 2023. Credit cards usually offer an APR range, rather than a single across-the-board rate for all transaction types.
A good way to improve your chances of getting approved for a low-interest credit card is to improve your credit score. Only consumers with an excellent credit score qualify for credit cards with the lowest credit card APR.
Even if you get a good APR for a credit card, most credit card interest rates are actually quite high. Credit cards are especially expensive when compared with the average interest rate on a personal loan (which is about 11.4% as of mid 2023). Still, you should strive for the best credit card APR you can get, particularly if you plan to carry a balance.
To give you a sense of just how much difference a few percentage points can make when it comes to paying off credit card debt, the table below shows you what it looks like to pay off $10,000 of credit card debt in $350 monthly installments with three different interest rates.
Metric | 27% APR | 24% APR | 20% APR |
---|---|---|---|
Time to pay off debt | 3 years, 11 months | 3 years, 9 months | 3 years, 2 months |
Total interest paid | $6,197 | $4,976 | $3,156 |
Total amount paid | $16,197 | $14,976 | $13,156 |
As you can see, having a 27% APR instead of an 20% APR tacks on nine extra months to your monthly payments and costs you more than $3,000 in additional interest.
There is no one answer to what a good interest rate for a credit card is -- it depends largely on your credit score and how you want to use the credit card. However, the national average for a low-interest credit card is sitting at 13.82% at the time of this writing.
There are many ways to get a card with a low interest rate. If you're currently paying off debt or plan to carry a balance, lowering your interest rate is one of the most effective ways to save money. Whether it's working with your current issuer or opening a new credit card, you have a number of options.
Here are some steps you can take to get approved for a low-interest credit card:
Negotiate with your bank: Almost everything is negotiable, including your credit card APR. If you've demonstrated that you can pay your bills on time, call your bank and ask if you qualify for a lower interest rate. This is especially effective if your credit score has gone up since you originally got the card. Be sure to mention your good credit score and history of on-time payments.
Apply for a low-interest credit card: If calling your bank doesn't work, shop around for a different credit card. There are plenty of great low-interest credit cards out there. These are good to have on hand if you ever have to carry a balance. Just make sure you qualify before you apply. And be aware that credit cards that focus on low interest rates tend to not be the best cash back or rewards cards.
READ MORE: Best Low Interest Credit Cards
Here are some of our favorite low-interest credit cards. For the full list, visit our Best Low Interest Credit Cards page.
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BankAmericard® credit card |
Citi® Diamond Preferred® Card |
U.S. Bank Visa® Platinum Card |
Rating image, 5.00 out of 5 stars.
5.00/5
Our ratings are based on a 5 star scale.
5 stars equals Best.
4 stars equals Excellent.
3 stars equals Good.
2 stars equals Fair.
1 star equals Poor.
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.
= Best = Excellent = Good = Fair = Poor |
Rating image, 4.25 out of 5 stars.
4.25/5
Our ratings are based on a 5 star scale.
5 stars equals Best.
4 stars equals Excellent.
3 stars equals Good.
2 stars equals Fair.
1 star equals Poor.
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.
= Best = Excellent = Good = Fair = Poor |
Rating image, 4.50 out of 5 stars.
4.50/5
Our ratings are based on a 5 star scale.
5 stars equals Best.
4 stars equals Excellent.
3 stars equals Good.
2 stars equals Fair.
1 star equals Poor.
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.
= Best = Excellent = Good = Fair = Poor |
Credit Rating Requirement:
Falling within this credit range does not guarantee approval by the issuer. An application must be submitted to the issuer for a potential approval decision. There are different types of credit scores and creditors use a variety of credit scores to make lending decisions.
Recommended Credit Score required for this offer is: Good/Excellent (670-850)
Good/Excellent (670-850) |
Credit Rating Requirement:
Falling within this credit range does not guarantee approval by the issuer. An application must be submitted to the issuer for a potential approval decision. There are different types of credit scores and creditors use a variety of credit scores to make lending decisions.
Recommended Credit Score required for this offer is: Good/Excellent (670-850)
Good/Excellent (670-850) |
Credit Rating Requirement:
Falling within this credit range does not guarantee approval by the issuer. An application must be submitted to the issuer for a potential approval decision. There are different types of credit scores and creditors use a variety of credit scores to make lending decisions.
Recommended Credit Score required for this offer is: Good/Excellent (670-850)
Good/Excellent (670-850) |
Welcome Offer: N/A |
Welcome Offer: — |
Welcome Offer: N/A |
Rewards Program: N/A |
Rewards Program: N/A |
Rewards Program: N/A |
Intro APR: 0% Intro APR for 18 billing cycles for purchases. 0% Intro APR for 18 billing cycles for any balance transfers made in the first 60 days. After the intro APR offer ends, 16.24% - 26.24% Variable APR on purchases and balance transfers will apply. A 3% fee applies to all balance transfers. Purchases: 0% Intro APR for 18 billing cycles for purchases Balance Transfers: 0% Intro APR for 18 billing cycles for any balance transfers made in the first 60 days |
Intro APR: Purchases: 0%, 12 months Balance Transfers: 0%, 21 months |
Intro APR: 0% on purchases and balance transfers for the first 21 billing cycles on purchases billing cycles, and after that 18.74% - 29.74% (Variable). Purchases: 0%, 21 billing cycles on purchases Balance Transfers: 0%, 21 billing cycles |
Regular APR: 16.24% - 26.24% (Variable) |
Regular APR: 18.24% - 28.99% (Variable) |
Regular APR: 18.74% - 29.74% (Variable) |
Annual Fee: $0 |
Annual Fee: $0 |
Annual Fee: $0 |
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BankAmericard® credit card is unavailable on The Ascent. All information was collected independently and not reviewed for accuracy or provided by the credit card issuer. Some items may be out of date.
Get a 0% intro APR credit card: If you already have credit card debt and are paying a high interest rate on it (think 20% or more), consider a balance transfer credit card. These credit cards offer a 0% intro APR on balance transfers for a limited period of time, allowing you to pay off your debt interest free. Keep in mind that most of these cards do charge a balance transfer fee. Also, if you don't pay off your balance before the intro period ends, you might end up with a higher credit card APR than you had before.
Join a credit union: Sometimes credit unions offer interest rates even lower than those that come with low-interest credit cards from major banks. That's because credit unions are not-for-profit organizations that pass off their profits to members in the form of low fees and better interest rates on savings accounts and credit cards. You do have to qualify to be a member, but often, joining a credit union is as simple as paying a small annual fee or living in a certain area.
Don't carry a balance: The best solution to avoid paying high interest fees is to avoid carrying a balance at all. Paying off your credit card bill in full every month will ensure that you don't waste a cent on interest fees.
Here are some other questions we've answered:
There's no set definition of what a good credit card APR is. It depends on factors such as your credit history, income, and the specific card product. As of August 2023, the average credit card interest rate is around 24% in the United States, and an APR of 20% would be on the lower end.
Credit card APRs are variable and are directly linked to the Federal Reserve's benchmark rates. So, when those rates are high, credit card APRs get higher, too. As of August 2023, a 24% APR would be very close to the average and wouldn't be considered high (for a credit card).
Our Credit Cards Experts
We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent, a Motley Fool service, does not cover all offers on the market. The Ascent has a dedicated team of editors and analysts focused on personal finance, and they follow the same set of publishing standards and editorial integrity while maintaining professional separation from the analysts and editors on other Motley Fool brands.