What's a good credit card interest rate?
How does the APR on your credit card compare with those of other similar cards on the market?
This post comes fromJeanine Skowronski at partner site MainStreet.
One of the advantages of having a great credit score is being eligible for the lowest annual percentage rates that credit card issuers have to offer. But with the industry average hovering close to 15%, how low (or high) do APRs currently go?
MainStreet breaks down the typical APR ranges, based on the type of credit card you have.
What's a great APR?
Generally speaking, low-interest-rate cards hover around 10%, but there are a few products on the market that advertise rates substantially lower. The Simmons First Visa Platinum, for instance, features an ultra-low 7.25% variable APR, but you're going to need well-above-average credit to qualify for that card. (Estimate your credit score for free.)
You could potentially score a similarly low APR with a lower credit score if you elect to go with a product from a credit union. Atlanta's Associated Credit Union, which allows new members to apply online, offers its Visa Platinum Preferred with a 9.9% APR to members with a FICO score higher than 680. It awards a 12% APR to members with a FICO score of 600. (Post continues below.)
APRs for rewards cards
Credit cards from major issuers have ranges that skew higher, especially when the card has a rewards program attached to it. According to Beverly Harzog, a credit card expert for Credit.com, Discover tends to feature the lowest rates and has a range of 10.99% to 19.99% on its More card. Meanwhile, Chase features 11.99% to 22.99% on its popular Freedom card.
Keep in mind that because these cards require good to excellent credit just to qualify, the low end of these rate ranges is reserved for those with perfect credit scores.
Harzog says you can probably get the card if your score is around 720, but your APR is going to be in the highest part of that range.
As such, those looking to get a rewards card should commit themselves to not carrying a balance, because the interest charges would simply cancel out any dollars, frequent-flier miles or experiential rewards you managed to earn from your purchases.
What's a bad APR?
There are cards that carry APRs well above the 22.99% mark. First Premier Bank, for instance, has a product that currently carries a 36% APR. (At one point, this card featured a 79.9% APR.) High-interest-rate cards like this are generally marketed to people who have less-than-stellar credit scores of about 650 or below, but even those customers should refrain from opting for a sky-high interest rate.
"Once you get above 22.99%, you're better off getting a secured card," Harzog says.
Secured cards require customers to put down a sum of money up front to cover the line of credit and thereby minimize the risk of default. The APRs on these cards fall anywhere from 8.99% -- again, more likely to be found at a credit union -- to 22.99%, but the idea is to use the card to build your credit back up so you can score a better rate on a traditional product.
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