Shopping for a credit card can feel overwhelming. There are many special bonuses, promotional rates and rewards to consider. But, finding the best credit card rates is important, particularly if you have outstanding debt.
According to Experian, one of the three major credit reporting agencies, the average credit card balance per consumer was $5,910 in 2022. Securing a credit card with a better-than-average annual percentage rate (APR) will allow you to save money and pay off your debt faster.
However, there are many different types of APRs, so it's a good idea to learn when each APR applies so you can compare offers and identify the best credit card interest rates for your goals.
What is a good APR for a credit card?
When evaluating a card, the APR is one of the most significant factors. The APR is a standardized way to compare costs, a percentage that reflects the interest and fees charged over one year.
Credit card APRs have increased dramatically over the past two years. In 2021, the average APR for all cards was just 14.60%. But as of August 2023 — the last available data — the average APR was a staggering 21.19%.
Why is that such a big deal? Consider this example: You have $5,000 in credit card debt, and your card requires a minimum payment equal to 2.5% of your balance — a common minimum — so your monthly payment is $125.
With that balance and payment amount at 14.60% APR, it would take you 55 months to pay off your debt, and the total repayment cost would be $6,774.42.
But if you had that same balance at 21.19%, you'd have a higher monthly payment due to the higher rate — $138 — and you'd be in debt for 58 months. You'd pay $7,996.58; the higher rate would cause you to pay $1,222.16 more in interest.
Finding the best credit card rates can help you save thousands and get out of debt faster. And right now, a card with a "good APR" is any card with a rate below the national average of 21.19%.
Types of credit card APRs
When talking about credit card APRs, people normally reference the purchase APR: the rate that applies to purchases of items and services. However, there are other APRs that you should know about:
Balance transfer APR
A balance transfer can be a smart way to speed up debt repayment and save money. With balance transfers, you move the balance of one credit card to another with a lower APR. The balance transfer APR is the rate that applies to the transferred balance.
Balance transfer APRs tend to be the same as the purchase APRs. However, some issuers will offer special promotional APRs on balance transfers, giving you a limited period to pay off your debt at a lower rate.
Cash advance APR
If you have a credit card, you can withdraw cash at an ATM with your card, effectively borrowing against your credit limit. The cash advance APR applies to these withdrawals, and the rate tends to be higher than the purchase APR. For example, many cards will charge rates of 29.99% or higher on cash advances.
Credit card issuers will adjust your card's APR to the penalty rate if you miss payments or your bank returns your payment due to insufficient funds. The penalty APR is usually significantly higher — often 29.99% or higher — and can last indefinitely.
Introductory APR offers
If a card has an introductory APR offer, it will give new card members a low APR — often 0% APR — for a limited time, such as six to 18 months, on balance transfers or purchases. Once the promotional period ends, the normal purchase APR applies.
For example, the Citi Simplicity® Card gives new card members 21 months at 0% APR for balance transfers and 12 months at 0% APR for purchases. Once the promotional period expires, a variable APR of 19.24% to 29.99% will apply.
These offers give you time to make payments against your debt or finance a major purchase without worrying about accrued interest.
How to compare credit card rates
Now that you know the typical rates and the different APRs that can apply, you can start shopping for a new credit card.
When comparing your options, it's wise to check each card's Schumer Box. The Schumer Box is a standardized table that appears on every credit card's rates and fees disclosure. Under the CARD Act of 2010, card issuers must include the Schumer Box with disclosures of key terms.
Below is an example of what a Schumer Box will look like:
Keep in mind that you only have to worry about the purchase APR if you carry a balance. If you always pay your statement balance in full by the due date, the card issuer won't charge you any interest. For that reason, some people don't mind if their card has a higher-than-average APY if it gives them useful benefits or rewards; interest never accrues since they always pay it off in full.
You only need to worry about the APR if you are making a purchase and need to carry a balance into the next statement period or are paying off existing debt.
How to qualify for the best credit card rates
To qualify for the best credit card interest rates, you'll need good to excellent credit, meaning you'll need a score between 670 and 850. To get there, focus on the basics:
Make timely payments: Your history of making on-time payments is the biggest factor that affects your credit score. Pay at least the minimum due by the statement due date for all of your bills.
Keep your balances low: A low credit card balance is easier to manage, but it can also help your score. A low credit balance means you have more of your credit limit available, which can positively impact your credit.
Only apply for credit when you need it: Every credit inquiry can cause your score to drop by several points. Although it can be tempting to apply for a loan to take advantage of a discount at checkout, avoid the impulse. Only apply for a new credit card or loan when you really need it, and are confident you can qualify, to limit new credit inquiries.
Editorial Disclosure: The information in this article has not been reviewed or approved by any advertiser. The details on financial products, including card rates and fees, are accurate as of the publish date. All products or services are presented without warranty. Check the bank’s website for the most current information. This site doesn't include all currently available offers.