APR, or annual percentage rate, is the cost of borrowing money on a credit card. It’s important to understand how APR works because it can affect your ability to pay your balance and how much you end up paying over time. If you’re wondering what is a good apr for a credit card, here’s what you need to know.
Know what APR means.
According to the SoFi website, “The APR on a credit card represents the total cost of the loan expressed in annual terms. A credit card’s APR includes the interest rate as well as any fees, including for late payments, foreign transactions, or returned payments.”
How Does APR Work
APR is a rate that is applied to the outstanding balance on your credit card. APR is calculated as a percentage of the balance owed and is generally made up of two components: the interest rate, which determines how much you pay if you carry debt for an extended period of time; and an annual fee, which may or may not be charged based on where you live and what type of account you have.
As noted above, APR can vary widely depending on what type of credit card you purchase. However, there are some general rules that apply across all cards when it comes to determining what your APR will be.
Average Credit Card APRs
Average credit card APRs are a major factor in determining whether or not you’re being charged an appropriate amount. Credit cards with higher APRs tend to be more expensive and less flexible than those with lower APRs, so it’s important to know what constitutes an average APR and which of these options are available for consumers like yourself.
When looking at the average credit card interest rate, keep in mind that there’s no one figure that applies across the board for every lender and their various offers. That said, according to data from Experian (a company that provides information on loans), most people pay between 12% and 30% APR on their credit cards, with 25% being the average number.
Compare Credit Cards
- Compare credit cards with the same APR. If you want to get the best deal possible on your credit card, look for one that has an APR lower than other similar cards. The higher the rate is, the more money you’ll pay in interest over time—and that’s not something any of us want!
- Compare different APRs between cards with similar features. You might find two great cards with very different rates; just make sure they don’t have anything else in common before deciding which one is better suited for your situation (or if one even applies at all).
In summary, APR is a great way to keep track of how much money you’re spending on your credit cards. It can also help you avoid getting into debt by keeping an eye on your balance and ensuring that you don’t spend more than you have available in your account. And although APR can be a little confusing at first glance, once it becomes second nature it will become a helpful tool for anyone using credit cards or loans.
