If you’re looking for a credit card, you have a lot of factors to consider. One of the most important things is the annual percentage rate (APR). This is the interest rate the bank charges when you carry a balance on the card.
So, what’s a good APR for a credit card? Let’s discuss.
How Is APR Determined?
Sometimes APR is fixed, but it’s usually a variable rate. Factors like your credit score and the U.S. Prime Rate decide the rate. The U.S. Prime Rate is the lowest interest banks will charge.
The Prime Rate could stay the same for years, or it could change many times in one year. This all depends on complex economic factors. So far, the highest Prime Rate was 21.5%, which happened in December 1980. The lowest prime rate since 1975 was 3.25%, which happened in December 2008 and again in March 2020.
If you check average credit card interest rates, you’ll see that they aren’t the same as the Prime Rate. For example, the Prime Rate in February 2025 was 7.5%. But the average credit card APR in February 2025 was 20.13%. Lenders normally add a margin on top of the Prime Rate. They tend to add a higher margin for people with lower credit scores and a lower margin for people with higher credit scores.
The APR of a variable rate card can change over time. But a company can’t change the APR on an existing balance. However, it can raise the interest rates on future purchases. To do this, they must give you 45-days’ notice.
Different Types of APR
A single card can have different APRs. This depends on how and when you use it.
The most common types of APR are:
Purchase APR
When you think about credit card interest, you’re likely thinking about the purchase APR. This is the rate that applies when you make purchases on a card. It also applies when you carry any part of the balance into the next billing cycle. Purchase APR normally doesn’t start adding up until after a grace period.
Cash Advance APR
The APR on cash advances is usually higher than the purchase APR on the same card. Cash advance APR normally starts adding up as soon as you withdraw the money.
Introductory APR
This is the purchase APR rate offered for a limited time. It’s used to attract new applicants. It’s usually lower than the standard rate. Sometimes it can be as low as 0%.
An introductory APR can last from a few months to a few years. After the introductory period, the APR will increase to the standard purchase rate.
Penalty APR
If you break your agreement by not making payments on time, a penalty APR may be applied to your entire balance. This can be much higher than the standard purchase APR.
Balance Transfer APR
This is the interest rate applied to a balance when it’s moved from one account to another. Low balance transfer APRs are often used to encourage you to transfer your balance onto a new card. But the rate usually only applies for a limited time. After that, the standard purchase APR starts.
What Is a Good Interest Rate for a Credit Card?
Credit card APRs can range from 0% (for special offers) to over 30%, depending on the card and your credit history. A lower APR means paying less in interest, but what counts as a “good” APR depends on your situation.
To figure out if an APR is good for you, check the average credit card interest rate. The Federal Reserve tracks and publishes this data in its Consumer Credit (G.19) report, which is updated regularly. This will give you a baseline.
Your credit score, the type of card, and whether the APR is fixed or changes over time all affect the rate you get. If you’re looking at credit cards, it may help to compare offers and read the terms. Checking things like special rates, penalty APRs, and fees can help you choose the best option for your needs.
Should You Do a Balance Transfer?
So, if you’re carrying debt on a high-interest card, is it a good idea to transfer your balance to a credit card with a lower APR? In some cases, yes. But it’s important to read the fine print.
Balance transfers often have a fee. The fee can be anywhere from 1% to 5% of the total balance. Also, if you’re using an introductory APR, you must pay the full balance by the end of the introductory period.
Why Credit Card Debt Relief Might Help
For some people, moving their balance to a low-interest card can make debt easier to manage. But if high-interest debt is still a struggle, it may help to look at other options—like budgeting, financial counseling, or debt relief.
Debt settlement is one way to deal with credit card debt. Experts can work with your creditors to try to lower what you owe. This can be helpful if you have a lot of debt or find it hard to keep up with payments. But everyone’s situation is different, so the best choice depends on your needs.
Since 2009, National Debt Relief has helped over 550,000 people take control of their debt. If you want to learn more about your options, talking to a professional is a good place to start.
