If you’re relatively new to the world of credit cards — or even if you haven’t — you probably have a few questions about an important concept: annual percentageor APR.
In the simplest terms, the APR represents the annual cost you pay to borrow money from a lender or credit card issuer. That’s the interest you pay on a credit card—but only if you don’t pay your card balance by the end of the “government mandated” periodGrace period” (at least 21 days, by law).
So what is a good credit card APR? And how can you avoid paying or finding cards with low or even zero APR?
What is a good credit card APR?
According to Federal ReserveThe average credit card APR tends to range between 14% and 18%. When it’s lower than that, you can consider it a good APR for a credit card.
This TPG guide for Best credit cards with 0% interest is a great place to start your research into current low-APR credit card options that offer a reduced or waived initial APR for the first year or so of card ownership.
Lower your APR on the card
In general, credit cards with low APRs typically require a good credit score — around 690 or higher — to qualify. They also offer fewer perks and benefits than premium cards with high APRs. Assuming you have a pretty good credit score, it’s all about balancing what you want from the card – low APR and minimal rewards or high APR and lavish perks.
Sign up for our daily newsletter
If you’re looking to create or rebuild your credit history, you’ll want to start with credit card guarantee to build that trust with credit institutions.
Some cards have what’s called a variable APR, which means that the APR goes up or down based on your credit score and payment history. The easiest way to lower your APR is to pay it in full on time. Also, lower yours use credit (meaning don’t use more than 30% of your available credit) and avoid applying for multiple credit cards at once. All these actions will increase your credit score.
bottom line
In an ideal world — if you’re watching TPG’s 10 Commandments of Rewarding Credit Cards — you never pay interest on any of your cards, so the APR isn’t the place to start. But if you follow these tips and prioritize low APR and no-APR card, you can minimize the stress that credit card interest can give you.
Editor’s Disclaimer: The opinions expressed here are those of the author alone, not those of any bank, credit card company, airline or customer chain. hotels and has not been reviewed, approved or endorsed by any of these organizations.
