What constitutes a favorable APR for a credit card?

Whether you're a newcomer to credit cards or not, understanding the concept of Annual Percentage Rate, or APR, is crucial.

In simple terms, APR indicates the yearly cost of borrowing from a lender or credit card issuer. It reflects the interest charged on a credit card, but only if you fail to settle your balance by the end of the mandated "grace period" (which is at least 21 days, according to law).

So, what qualifies as a good credit card APR? How can you steer clear of it or discover credit cards that offer low or even zero percent APR?

What is considered a good APR for credit cards?

As of July 2024, the typical credit card interest rate stands at 24.84%. This figure is derived from an analysis of 200 popular credit cards in the U.S., tracked by Lending Tree. Thus, any APR below this average could be deemed a "good" credit card rate.

If you’re in search of credit cards with low APR options, take a look at TPG's top recommendations for 0% APR and low-interest credit cards.

These credit cards provide a 0% introductory APR for new cardholders on purchases for a limited duration, making them perfect for large upcoming expenses.

Ways to reduce your APR on a credit card

In general, low-APR credit cards typically require a good credit score—around 690 or above—for approval. They also tend to offer fewer benefits and rewards compared to high-APR premium cards. If you have a decent credit score, it ultimately comes down to your preferences: a low APR with limited rewards or a higher APR with luxurious perks.

If you're aiming to establish or rebuild your credit history, starting with a secured credit card is a wise choice to gain the trust of credit issuers.

Some credit cards feature a variable APR, which can fluctuate based on your credit score and payment history. The simplest way to reduce your APR is by paying off your balance in full each month. Additionally, keep your credit utilization below 30% of your total credit limit, and avoid applying for multiple credit cards simultaneously. These steps will help improve your credit score.

Key takeaway

Ideally—if you're adhering to TPG's 10 commandments of credit card rewards—you would avoid paying interest on any of your cards, making APR irrelevant. Nevertheless, by following these strategies and focusing on applying for low- and zero-APR cards, you can alleviate the burden of dealing with high credit card interest rates.