What's a Good Credit Card APR?

Credit card annual percentage rates, or APRs, may finally be easing since the Federal Reserve started lowering interest rates last year. But that's after the Fed spent the past couple years raising rates to combat inflation, leaving average APRs well over 20%. 

A credit card's APR is the rate at which interest accrues on any balance you carry from one billing cycle to the next. If you pay off your credit card balance in full and on time every month, your APR doesn't really matter. But if you carry a balance, your APR determines how much interest you'll pay on your debt, and it can add up quickly. 

The Federal Reserve isn't the only factor contributing to your credit card APR and the cost of your debt. Your credit score and credit history ultimately determine where your specific APR falls within a credit card's set range. Credit cards for people with good credit typically offer lower APRs than credit cards for people with "bad" credit.

Regardless of your specific interest rate, carrying a balance will cost you. But there are multiple types of APRs and things you can do to minimize the interest you pay. We break it all down below. 

What is a good credit card APR?

The average APR on a credit card is over 20%. If your credit card APR is higher than that, it may be worth shopping around, especially if you're carrying a balance.

Credit card issuers began bumping up APRs in the wake of Federal Reserve rate hikes, and some started lowering them after the Fed cut rates last year. You may not receive an explicit disclosure if your credit card interest rate increases or decreases, so make sure to keep an eye on your statements.

Types of credit card APRs

First, let's explore the different types of annual percentage rates for credit cards.

Purchase APR: A purchase APR -- the standard APR you'll most often hear about without the word "purchase" in front of it -- is for any new purchases made on your credit card. The purchase APR applies to your balance that's carried into the next billing cycle.

Introductory APR: Also called a promotional APR, this is a special offer often used to entice new cardholders. 0% introductory APRs are typically restricted to a certain period of time after account opening, such as 12 or 18 months. 

Cash Advance APR: Most credit cards allow you to withdraw money against your card's line of credit in the form of a short-term loan, but issuers will usually charge a cash advance fee. On top of that fee, cash advances carry a separate, and often higher, interest rate than purchase APRs. 

Balance transfer APR: If you want to transfer the balance from one credit card to another card, a balance transfer APR applies.

Penalty APR: Penalty APRs typically apply to late payments. While charges vary, some penalty APRs are as high as 30% for payments later than 60 days.

Before you commit to a credit card, be sure to consider APRs in their entirety, especially which APRs come into effect after the promotional period ends. From here on, we'll be discussing the most common rate credit card users deal with: purchase APRs.

Read more: Credit Cards, Interest Rates and APRs: Everything You Need to Know

How to qualify for a good credit card APR

It pays to know how you might qualify for a lower credit card APR for everyday purchases. Credit card issuers most often look to your FICO credit score to determine how likely you are to make full payments on what you spend. 

Credit cards with the highest APRs

Higher APRs tend to come with credit cards associated with rewards and other benefits. However, store credit cards, which don't typically come with many perks and are limited to use at a specific retailer, also typically charge higher APRs. Store card APRs averaged 30.45% in 2023 while the average across all credit cards was just under 22%.

It's important to review your options carefully before you choose a credit card. Credit cards can have APRs that can quickly put you in debt you can't climb out of.  

Tips for securing a lower APR on your credit card

If you don't qualify for the rate you want, our advice is to work on improving your credit score. The best way to do this is by paying off your balances in full each month or at least paying down as much as possible each billing cycle. 

This can take time, however, so there are a few short- and long-term solutions to consider if you need to reduce your APR now.

• Consider 0% introductory APR credit cards: If you need to finance a purchase or transfer a high APR balance, and can pay the amount back the next 12 to 20 months, a 0% introductory APR card can help. Just be sure you can repay the balance in full before the introductory period expires and the APR kicks in. You also want to watch out for balance transfer fees, which can add up if you're moving a large balance.
• Talk to your credit card provider: In some cases, you can negotiate your current card's APR, particularly if you have a strong history of making on-time payments.
• Apply for debt consolidation or home equity loans: Personal and home equity loans typically carry lower interest rates than credit cards and might be worth considering if you need more time (two years or longer) to repay your debt.

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