According to a Federal Reserve report (PDF), the average credit card Annual Percentage Rate (APR) was 14.75 percent in February 2021. Generally speaking, any interest rate below that figure would be considered “good."
Types of credit card APRs
- Introductory/promotional APR: This type of APR applies for a set period of time, like with a balance transfer credit card commonly offered for new cardmembers. Usually, the offer is a zero percent introductory rate that lasts somewhere from several months to over a year.
- Purchase APR: This is the regular APR that comes with your credit card when you make a purchase for goods and services.
- Cash advance APR: This is higher than your purchase APR. Cash advance APR comes into play when you use your credit card at a bank teller or an ATM to access cash right away. The cash advance APR often starts the day the cash advance is made. Besides the higher APR, you may also face a cash advance fee.
- Penalty APR: If your account becomes delinquent, you may have a higher APR. Penalty APRs can be in the range of 30 percent. To avoid a penalty APR, try to at least make the minimum monthly payment on your account on time.
How is your APR determined?
Depending on the issuer, a credit card can have the same APR for all approved users, or may offer different APR options depending on the below factors:
- If there's a range of APRs on a particular credit card, the issuer decides your APR based on your creditworthiness, or how much of a risk you are as a borrower. To lenders, a higher credit score is usually less risky than a lower credit score. Many factors go into determining APR and your credit score is just one of them.
- Other factors that could determine your APR are your debt-to-income ratio, previous payment history and any negative items on your credit report. Even if you have an excellent credit score, that's not a guarantee that you'll get a lower APR.
- Rewards credit cards may have higher APRs than basic credit cards. The highest APRs typically apply to store credit cards and credit cards designed for those with poor or little credit.
How to qualify for a credit card with a good APR
- Check your credit score using Chase Credit Journey
- Make your monthly payments on time
- Lower your credit utilization ratio. Ideally, you want to keep that number below 30 percent — but the lower, the better.
- Don't apply for a lot of credit cards at once
- Keep your current cards open and active rather than closing them
- Keep an eye on your credit report
Credit cards with low APRs
To qualify for a credit card with a low APR, you'll likely need a good credit score. Using the VantageScore 3.0® model, scores above 660 may be considered good or excellent.
Credit cards with high APRs
Rewards credit cards and store credit cards tend to come with higher APRs, but they often come with perks and benefits. If you typically carry a balance, this may not be the way to go.
How to avoid paying APR
While getting a low APR is important, what's even more important is avoiding paying interest altogether if possible. You can do this by paying off your balance in full each month and trying to limit purchases to items within your budget.
If you find that you're having trouble managing your debt, consider a balance transfer credit card that has a zero percent introductory offer. This can help you avoid paying interest for a set period of time and help get you back on your feet.