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This article was last updated Oct 19, 2018. Terms and conditions may have changed. For the most accurate information, please consult the issuer website.
Are you looking for a credit card with plans to carry a balance on it? You’ll want to find one that makes the cost of borrowing that money as low as possible — in other words, you want to get the lowest average annual percentage rate (APR) possible.
In simple terms, an APR is the amount of interest a bank or company charges for credit card balances.
The average APR consumers pay on credit card debt is 15.54%, according to a recent analysis of rates by CompareCards.com.
Your APR may be higher or lower than that depending on several factors, like the type of card you’re looking at or your credit score. A retail credit card will likely have a higher APR than your typical bank card, for example.
“It’s not unusual for cards aimed at folks with very good to excellent credit to still have high APRs,” said Matt Schulz, Chief Industry Analyst at CompareCards by LendingTree. “For example, the Chase Sapphire Reserve®’s purchase APR is 16.99%-23.99% Variable and the Starwood Preferred Guest® Luxury Card from American Express’s* is 17.99% - 26.99%Variable APR.”
|Typical APR for bad credit||Single digits to 17%|
|Typical APR for fair credit||14% to the low 20s%|
|Typical APR for excellent credit||Low 20s% to as high as mid-30s%|
The best APR is one that doesn’t even come into play, said Schulz. “Every credit card holder needs to aspire to pay their balance off in full at the end of every month,” he advised. “That way, they don’t have to worry about whether their APR is too high or too low. But life happens, and that’s often far easier said than done.”
It’s important to know how good your credit is before you apply for new credit. “The last thing you want to do is apply for a card thinking that you’ll get a 15% APR and end up with a 24% APR because your credit wasn’t good enough,” Schulz said. “That can be a really unpleasant surprise.”
Card issuers list their APR range in the terms and conditions section of their website, so take a look to see what range you can expect, too. We’ll explain why your credit score isn’t always the main thing that drives the APR you’ll pay on a card. We’ll also share credit cards with different low APR options.
Does credit score always count?
Credit score isn’t always an indication of card APR. The type of card matters, too.
Credit union credit card APRs, for example, are often lower than those from banks in part because there’s a cap on how high they can go, Schulz explained. “They can’t go higher than 18%, which is a really big deal. There is no rule limiting what rates banks can charge on a credit card, so rates can vary really widely,” he said.
For example, Albuquerque, N.M.-based Nusenda Credit Union’s Visa® Platinum Rewards Credit Card from Nusenda Credit Union comes with a regular purchase 10.75% - 14.75% Variable APR and a balance transfer 10.75% - 14.75% Variable APR. The card has a $0 annual fee and you only need Good credit to get it.
It’s simple to join this credit union. All you have to do is donate $10 to the New Mexico Wilderness Alliance; call a customer representative for details.
But some cards charge high APRs even for those with solid credit scores. The First PREMIER® Bank Credit Card comes with a First PREMIER® Bank Credit Card APR using the average daily balance method to calculate the interest charge for each billing cycle.
Retail/store cards have notoriously high APRs compared to regular cards. For example, Pottery Barn Credit Card has a regular purchase 28.74% variable APR, and other cards in this category have APRs near 30%, said Schulz. “Those are at the high end of the spectrum, but even cards for folks with really good credit can have APRs of 25% or higher,” he noted.
Check out the 2018 Store Credit Card Study.
If you can get a lower APR than the 15.54% cited in the CompareCards.com, you’re doing fine, said Schulz. The good news is that there are plenty of cards like that available if you have good credit.
“For example, the Capital One® VentureOne® Rewards Credit Card has a purchase rate of 14.49% - 24.49% (Variable) APR, while the Citi® Diamond Preferred® Card’s purchase rate is 14.74% - 24.74% (Variable) APR,” said Schulz. “Alternatively, PenFed Power Cash Rewards Visa Signature® Card has a 14.99% to 17.99% variable purchase APR with a $0 annual fee.”
Credit card options
You have choices when it comes to low-APR credit cards: ones that have low intro purchase APRs, ones that have ongoing low APRs and ones that have both.
Credit card companies like to lure new members in with low introductory purchase rates. These introductory 0% rates generally last for between 6 and 18 months and can be a great deal — if you pay the card off before they go away. We’ll take a look at credit cards that offer customers the best options in each category.
Cards with long 0% intro purchase APRs
This $0 annual fee card starts with a generous purchase intro rate of 0% for 12 months on Purchases. But once the intro time period ends, you’ll start paying a 14.74% - 24.74% (Variable) APR. The card matches its name because it doesn’t come with a sign-up bonus or offer any rewards or cash back.
Cards with low-purchase APRs
PenFed Power Cash Rewards Visa Signature® Card
For a $0 annual fee, the card has a 14.99% to 17.99% variable APR purchase rate. New cardmembers can earn a $100 statement credit when you spend $1,500 in the first 90 days and earn 1.5% cash back on all purchases made with your card (2% total cash back for all PenFed HonorsAdvantage members).
You do need to belong to the PenFed Credit Union before applying for this card, but there are plenty of ways to join. It’s open to those who serve in the U.S. military or uniformed services and employees of the U.S. government, or anyone related to someone who is. You can also join if you belong to affinity partners like the American Medical Association or if you join the National Military Family Association or Voices for America’s Troops.
0% for 14 months on purchases and Balance Transfers, then 11.99% - 22.99% Variable.
Earn 5% cash back on everyday purchases at different places each quarter like Amazon.com, grocery stores, restaurants, gas stations and when you pay using PayPal, up to the quarterly maximum when you activate. Plus, earn unlimited 1% cash back on all other purchases – automatically. *
Get a dollar-for-dollar match of all the cash back you've earned at the end of your first year, automatically*
- INTRO OFFER: Unlimited Cashback Match – only from Discover. Discover will automatically match all the cash back you’ve earned at the end of your first year! There’s no minimum spending or maximum rewards. Just a dollar-for-dollar match.
- Earn 5% cash back on everyday purchases at different places each quarter like Amazon.com, grocery stores, restaurants, gas stations and when you pay using PayPal, up to the quarterly maximum when you activate.
- Plus, earn unlimited 1% cash back on all other purchases - automatically.
- Redeem cash back any amount, any time. Rewards never expire.
- Use your rewards at Amazon.com checkout.
- Get an alert if we find your Social Security number on any of thousands of Dark Web sites.* Activate for free.
- No annual fee.
- See Rates & Fees
See additional details for Discover it® Cash Back
Although the card doesn’t come with the bells and whistles that others have in the rewards category, it does start with an intro APR of 0% for 14 months on purchases. The card’s regular purchase 11.99% - 22.99% Variable APR is pretty good. Unlimited Cashback Match – only from Discover. Discover will automatically match all the cash back you’ve earned at the end of your first year! There’s no minimum spending or maximum rewards. Just a dollar-for-dollar match. Cardmembers Earn 5% cash back on everyday purchases at different places each quarter like Amazon.com, grocery stores, restaurants, gas stations and when you pay using PayPal, up to the quarterly maximum when you activate. Plus, earn unlimited 1% cash back on all other purchases – automatically.
Cards with low intro and ongoing purchase APR
This is a very basic bank credit card, but what it lacks in benefits, it makes up for with one of the lowest APRs in the industry. It starts with an intro purchase rate of 0% Introductory APR on purchases for 18 billing cycles. The regular purchase APR of 14.49% - 24.49% Variable APR, and there’s no penalty APR if you make a late payment.
The HSBC Gold Mastercard® credit card offers intro purchase APR of 0% for 18 months (after, Variable APR of 12.99% - 22.99% will apply after the Introductory Period APR). It comes with a $0 annual fee. There’s no sign-up bonus, but cardmembers do get some basic travel and purchase perks.
The bottom line
It’s important to shop around, said CompareCards.com’s Schulz. “There really are differences among cards and among issuers,” he said. “Watch for offers in your snail mail. Consider making a call to your current credit card issuer. Do your homework before you apply.”
And don’t forget, you can ask for a credit card APR adjustment if you feel your credit has improved. In a March survey, CompareCards.com found that only one in four credit card holders have asked for a lower APR. Among the fraction of cardholders who did ask for a lower rate, nearly two-thirds (64 percent) reported receiving one.
The best thing that people should understand is that credit is a marathon rather than a sprint, said Schulz. “Pay your bills on time every time, keep your balances low and don’t apply for too much credit too often and you’ll be fine.”
The information related to Citi Simplicity® Card - No Late Fees Ever have been independently collected by CompareCards and have not been reviewed or provided by the issuer of this card prior to publication. Terms apply to American Express credit card offers. See americanexpress.com for more information.
*This offer and/or promotion may have since changed, expired, or is no longer available.