Understanding credit card APR is essential for anyone who uses credit cards, whether they are new to the world of credit or have been using credit cards for years. APR, or annual percentage rate, is the annual cost you pay to borrow money from a lender or credit card issuer. It represents the interest rate you pay on a credit card if you do not pay your card balance by the end of the government-mandated grace period.
In this article, we will delve deeper into the concept of credit card APR, discussing what constitutes a good credit card APR, how to lower your APR on a card, and the bottom line on managing your credit card APR effectively.
## What is a good credit card APR?
As of February 2024, the average credit card interest rate is 24.61% based on 200 of the most popular credit cards in the U.S., as tracked by Lending Tree. Any APR lower than the average might be considered a good credit card APR in relative terms.
If you are looking for a credit card with a low APR option, you may want to explore the best 0% APR and low-interest credit cards. These cards offer a 0% introductory APR to new cardholders on purchases for a limited time, making them ideal for large upcoming purchases.
## Lowering your APR on a card
Low-APR credit cards typically require a good credit score, around 690 or higher, to qualify. These cards often offer fewer perks and benefits compared to high-APR premium cards. It ultimately comes down to what you prioritize in a credit card – a low APR with minimal rewards or a higher APR with luxurious perks.
If you are looking to create or rebuild your credit history, starting with a secured credit card can help build trust with credit issuers. Some cards have a variable APR, which fluctuates based on your credit score and payment history. The simplest way to lower your APR is to pay off your balance in full each month, maintain a low credit utilization ratio, and avoid applying for multiple credit cards simultaneously to boost your credit score.
## Bottom line
Ideally, you should aim to follow TPG’s 10 commandments of credit card rewards and avoid paying interest on any of your cards. By prioritizing low- and zero-APR cards and following these tips, you can minimize the stress of high credit card interest rates and manage your credit card APR effectively.
In conclusion, understanding credit card APR is crucial for making informed decisions about your credit card usage and managing your finances effectively. By knowing what constitutes a good credit card APR, how to lower your APR on a card, and prioritizing low- and zero-APR cards, you can navigate the world of credit cards with confidence and financial savvy.