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If you are thinking about what’s a good APR (annual percentage rate) for a credit card and wanted to know that so, compare credit card APR with the average interest rate. If the card’s APR is below than national average, this means that that is a good APR. Presently, the average credit card APR is above 16%.
A good APR varies depending on what type of card do you have or on your creditworthiness. It is easy to get a good APR if you have good credit. But a good APR varies depending on certain factors. A prime rate is a benchmark figure from which APR is tied. The prime rate is the lending rate by which banks offer its customer with excellent credit. Credit card interest rate increases as the prime rate increases. Few cards have APR from 13% to 23%, which may vary on your creditworthiness and what type of credit card you have. If your credit score is better, then your interest rate will be low. If you are searching for today’s best credit card that gives you a bonus, rewards, and perks, then a credit card at the national average is a great option.
More on APR
You should always avoid the credit card, which is above the national average because if you carry a balance on these cards, you will end up with a large amount of interest. The most common credit card APR is the purchase APR. It is the most common in which people are interested. Purchase APR means the interest rate that you pay on purchases. Higher interest rates will be offered to the people with below-average credit scores as compared to the people with good credit scores. This means that the credit card interest rate is different for people with fair credit and excellent credit.
If you wish to have the best credit card APR, you will have to improve your credit score. For this, you have to bring your FICO score to 670. Then your credit will become PRIME from SUBPRIME. After your credit moves to prime, then you will be eligible for prime Interest rate, and as your creditworthiness continues to improve, you will receive good credit APR offers from the lender. The APR becomes irrelevant when you don’t carry a balance from month to month, as you will not charge interest. But if you carry a balance from month to month, then APR will decide that how much interest you will pay over time.
Suggested Read: What Is the Difference Between Charge Card and Credit Card
How to Become Eligible for a Good APR for Credit Card
By practicing good credit habits, you can be eligible for a good credit card APR. These are few steps that you take right now to improve your credit score.
Make sure that you make all your credit card payments on time each time. 35% of your credit card score is made by your payment history. So always make sure that you pay all your payments on time. So make sure it’s always positive.
To improve your credit utilization ratio, keep your balance low. Always avoid maxing out a credit card. Don’t use more than 30% of your available credit.
You should be debt-free. Moreover, should always pay off all your outstanding balance as much as possible.
Also, you should not apply for several credit cards at once.
You should always keep your credit card active and open with small purchases.
With these few steps, you can qualify for a good credit card APR. So you can keep more money in your pocket than paying high interest. So, be regular in following these steps and make them your credit habits.
Credit card companies have begun to assist users with low credit limits. If you’re having trouble, get the Milestone Gold Card here.
How to Access the Worth of APR for Credit Card
According to the federal reserve in February 2021, the credit card average APR charged that incurred interest was 15.91%.
But all credit cards are not created equal. Some will be more expensive than others to carry a balance. For example, a balance transfer credit card is lower than a rewards credit card with all the perks and benefits. And various transactions – cash advance, purchases, balance transfer on the same card may have different APRs. You can also face Penalty APR sometimes. The rate of penalty APR is mentioned on credit card terms and conditions. So, you should always review it.
Interest rates on a credit card are low at credit Union than at Major banks. If you want a low APR so you should consider a credit union.
Cards With Low APRs
Low-interest credit cards generally require an excellent credit score. 690 or higher depending on the card issuer to qualify.
These cards may not have as many benefits and perks as rewards credit card, but it can save your lots of money from interest if there is balance in your account each month.
0% is an ideal APR in an introductory offer that lets you avoid interest payment for a period of time. The second best option is a low ongoing rate. Currently, the low ON going APR is 6.25% variable.
Cards With High APR’s
Store credit cards and rewards credit cards have high APRs. Valuable perks, benefits or discount is offered in these cards. But if you carry a balance each month, then it is not ideal for you. As interest will finish rewards.
Two Ways to Lower Your APR for Credit Card
The two ways to lower your credit card APR are as following:
The first way to lower your credit card APR is, contact your card issuer and ask him to lower your credit card APR. Don’t feel nervous or uncomfortable calling your customer service because a survey shows that 69% of people who call customer service and ask for a rate cut received one. So if you are facing a problem making your monthly payments, your card issuer may consider you for a hardship program. So, call your customer service for a lower credit card APR.
The second way to lower your credit card APR is by building your credit. In this way, you will be offered a better interest rate, promotional 0% APR to creditworthy customers.
Different Types of APR for Credit Card
There are different types of APRs with your card. So, it is very important to know these types of APRs so you can know what interest is costing you.
Purchase APR
If the credit balance is not fully paid off, then the interest rate is charged on the purchases. Remember that many cards have a grace period
Penalty APR
When you spend beyond your credit limit, or you make a late payment, then you have to pay a penalty APR. Penalty APR is higher, and it is applied when payment is late for more than 60 days.
Introductory APR
It is the temporary special rate that is offered by your card issuer for signing up for a specific card as a perk. Even a zero % introductory rate is offered for a certain period of time. On balance transfer, purchases, or both. It is an attractive feature for the cardholder.
Balance Transfer APR
When balance is moved from one card to another, the interest rate is charged, which is k ow as balance transfer APR. 0 % balance transfer APR is also offered by some card issuers as an introductory for a period of time.
Conclusion
A good APR is one that is below the national average. APRs vary depending on what type of card you have or your creditworthiness. A prime rate is a benchmark figure. If your credit score is good, then your interest rate will be low. You should avoid credit cards with an above national average rate. Good credit habits can make you qualify for a good APR. Low-interest credit APR requires an excellent credit score, but these cards don’t have many perks and benefits as rewards cards. Store credit cards and rewards cards have high APR. The two ways to lower your credit card APR are by contacting your customer service, and the second way is by building your credit.