As with most other interest rates, such as those for buying a car or a home, credit card interest rates this year have also slowly but surely increased. Today credit card APR is higher than ever before and there’s no sign that the increased will stop anytime soon. However, if you have a good credit score and a solid credit history, and compare the APR of credit cards, you can find low rates.
Keep reading to learn about what a good APR is for a credit card and ways you can find the lowest APR rate.
Finding the Best APR
Shopping for a new credit card isn’t a decision to make likely. You want to find a card that not only offers a low APR, but also one that offers benefits such as cash back or a rewards program. Your credit spending behavior will greatly influence how you choose the best APR credit card for your needs.
If you tend to carry a balance on your cards, it’s going to be harder to find a low-interest rate card. Thankfully there are some lenders that will offer you a lower-than-average interest rate, especially if you don’t carry too high of a balance. By finding a low interest credit card, you can save hundreds of dollars that you’d otherwise spend on interest.
But this begs the question, what is a good interest rate? The simplest answer is that a good interest rate is one that you can afford in both the short and long term. You want to find a credit card that has an APR that you can fit within your monthly budget.
In the ideal world the best interest rate is 0%. While this is an option, the rate is temporary and requires a strict payment schedule to achieve a zero balance before the interest-free period ends.
Know Your Card Types
Not all credit cards follow the same interest rate rules. Retail store cards and rewards cards tend to have higher interest rates than traditional credit cards. The APR you’re approved for these types of cards is somewhat impacted by your credit score and history but typically these rates are fixed for all consumers. With these types of cards, your credit standing more so impacts your credit line amount.
If you’re applying for a credit card issued by a lender such as a credit union or a large financial institution, your credit worthiness is much more of a factor. Having a good credit score and credit history increases your chances of getting approved for a lower-than-average APR.
Improve Your Qualifications
Obviously not everyone is going to be able to qualify for an interest rate that’s lower than double digits. However, there are certain things you can do to increase your chances of getting the lowest interest rate possible.
First, start at the source. If you want a very low APR rate, you’ll want to start by applying at a community bank or even a credit union. These financial institutions tend to offer lower rates to attract more customers. On the other hand, large-scale issuers rarely budget when it comes to interest rates.
The next step in getting approved for a low APR is to boost your credit score. Begin with reviewing your credit report. Check for any discrepancies than may be weighing down your score. If your credit report is correct and your score could use a boost, there are many things you can do to improve your score.
To improve your credit score:
- Pay off low debt balances
- Pay your bills on time
- Lower credit card balances
- Don’t apply for too many cards too close together
By taking the time to improve your credit score, you’re more likely to get approved for a low-interest rate credit card. Credit scores in the mid-to-high 700 range tend to automatically get approved for a low interest rate. While your credit score won’t change drastically overnight, taking the steps to improve your score will benefit you by saving you money in the long run.
Know Before You Apply
Knowing your credit score and credit history is a must before applying for any credit card. But, there are other things you’ll want to do before applying. Ensure you can afford a new credit card payment. Take the time to budget and figure out a payment schedule. You’ll also want to research credit cards to find the one that’s most beneficial for you.
Getting a new credit card isn’t a decision to make on a whim. With these tips and tricks, you can increase your chances of getting approved for a credit card that offers a good APR.