What Is a Good APR for a Credit Card – How to Qualify For it

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You may have heard the term ‘’annual percentage or APR’’ while shopping for mortgages, auto loans, or credit cards. When it comes to a credit card, the APR or annual percentage is the interest rate a bank charges when a balance is carried on a credit card. Though APR is indicated as an annual rate, the bank makes use of it to calculate interest charged every month. What qualifies as a good APR for a credit card depends on several factors including your credit and your type of credit card.

Furthermore, if you have good credit, a good APR for a credit card may be very easy to come by. Some credit cards charge the same APR to customers. Other also have APR ranges from 13.99% to 23.99% for example.  Where you fall in that range depends on your creditworthiness.  That is why you won’t always get the lowest advertised APR. In general, the better the credit you have, the better the APR you can qualify for.

A Good Credit Card APR

The best APR for a credit card you can get is 0% but is only temporary. Many credit cards offer promotional O% APR to new customers for a year or more. After the introductory period is over, the interest rates reset to the ongoing APR. However, if you do not carry a balance every month, the APR is irrelevant because you will never be charged interest. But if you carry a balance, then the APR determines how much interest you have paid over time.

How to Evaluate Credit Card APR

As of 2021, the average APR charged for a credit card that incurred interest was 16.44%. For all credit card accounts, the average was 14.50%. If you have APR below the average, then you can consider it good.

However, not all credit cards are created equal, and some may be very expensive to carry a balance than others. For example, a reward credit card with perks is likely to have a very high APR or range that reaches higher. And different transactions such as balance transfer purchases, and cash advances may have different APRs on the same card (One card). Sometimes, there might even be a penalty APR for late payments.

If a low APR on purchases is what you want, consider options from credit unions. Their interest rates tend to be very low than major banks

How to Lower Your APR

There are so many ways to lower APR. You can shop around if credit card issuers offer 0% introductory that you may be able to qualify for. If you qualify for some of the promotions, you can transfer a balance for a fee and avoid paying the interest by paying down the debt.

You can also reach out to different credit card companies and negotiate a lower rate. Be sure to evaluate credit and your lender’s view beforehand. This might give a better idea of the offers your lender will present to you and also prepare you to negotiate a better rate.

However, you should always have it at the back of your mind that the best way to lower your credit card APR is to improve your credit score.  A good credit score will give you more options and opportunities to qualify for low-interest cards. It will also put you in a good position to negotiate for a better and lower rate with a credit card company.

How to Qualify for a Good Credit Card APR

While you might not be able to control all the different factors that determine your APR, you can be very proactive when maintaining your creditworthiness. You can also take a look at negotiating with your creditor for a lower APR. However, if it turns out that your credit score needs a boost, the below steps can be you qualify for a low APR in the future – even lower. Check the following important steps to qualify;

  • Avoid applying for more than one credit card at a go.
  • Monitor your credit score well and accurately
  • Make sure you make your payments on time.
  • Lower your credit utilization. Do not make use of more than 30 percent of available credit
  • Keep your (current) no annual fee active with small purchases all the time
  • Get a free report from each of the three major bureaus every year using annualcreditreport.com
  • Always monitor your credit report

With more moves and information from experts, you should be able to set a foundation for a low APR that leaves more money for you.