What Is a Good APR on a Credit Card?

A good annual percentage rate (APR) on a credit card is around 10 percent, says TheStreet. Some credit cards offer annual percentage rates that are even lower than this.

The average APR available for credit cards is approximately 15 percent, explain authors at TheStreet. While people naturally strive to get the best rates on an APR that they can, there are several external factors that influence what kind of APR they might expect to get. A person with a good credit score, for instance, will be more likely to get a card with a favorable APR than a person with a bad credit score. Credit cards with the lowest annual percentage rates usually require an exceptionally good credit score to qualify.

What Is an APR? An APR is interest that is charged specifically for the use of credit cards. Banks and card issuers calculate what amount of interest they will charge for the use of a certain credit card, which determines its APR. For people who don’t have a credit history or don’t have a good credit rating, there are still ways to apply for a card with a lower APR. People can go through a credit union to do so, such as the Associated Credit Union, which is based in Atlanta. The Associated Credit Union allows its members to apply for a card online and awards its customers with a card of a 9.9 APR if they have a FICO credit score of 680 or higher. Those with a FICO credit score of 600 can get a credit card with a 12 percent APR.

Rewards Programs and APR Many credit cards are issued with a rewards program, which encourage customers to use their cards for purchases. In return, customers are given options to get cash back on certain purchases, air miles, gift cards to select retailers and more. Credit cards that come with a lower APR are also more likely to have better rewards programs. While this can be beneficial for cardholders, there are also risks involved of which users should be aware. Having a balance on the credit card that carries over from month to month, or until it is paid off, can essentially erase the rewards available through the card’s program, warn authors at Credit Karma.

Bad APR Rating Just as there is a “good” range of an APR for a credit card, there are also bad ranges. Some cards carry an APR of up to 20 percent and even 30 percent or higher. These types of cards are usually geared towards people with poor credit scores, who are otherwise left feeling that they cannot get a credit card from a lending institution. In this case, however, people should opt for a secured card instead of one with a high APR, note authors at TheStreet. People may have to put down money up front to cover a line of credit, but they’ll be less likely to default. In doing so, they will be able to safely build their credit score over a period of time, which can help them get a credit card with a better APR at a later date.