Skip to content

RateSage

Mortgage rates, simplified.
← Back to news

Full article

Full article text extracted for easier reading in-app.

Mortgage rates Yahoo Finance

How to find the best credit card interest rates: Excellent credit is key

Learn what makes a good credit card interest rate, how your credit affects your APR, and what you can do to qualify for a lower rate.

Kat Tretina · Yahoo! Finance

Credit card interest is expensive — the average credit card APR is currently over 21%. If you carry a balance, getting a lower APR can make a real difference in how much your debt costs and how quickly you can pay it off. But there's no single credit card interest rate everyone can qualify for. The rate you're offered depends on the card, your credit history, and other factors. Generally, the better your credit, the better your chances of qualifying for the lowest available APR on a card.

  • A good credit card APR is generally one that's below the current average and toward the lower end of a card's advertised APR range.

  • Your credit history can affect the APR you're offered, and stronger credit can improve your chances of qualifying for a lower rate.

  • Most credit cards have variable APRs, which means your interest rate can change over time.

  • If your card has a grace period and you pay your statement balance in full by the due date each month, you can generally avoid paying interest on purchases.

A good credit card APR is generally one that's below average — but there's a little more to it than that. According to the Federal Reserve, the average APR across credit card accounts is currently 21.19%. That gives you a useful benchmark, but you should also compare the APR ranges of individual cards.

Most cards don't advertise one APR. Instead, you'll see wording along the lines of "XX.XX%-XX.XX% variable APR," with your actual rate determined after you apply. If you're offered a rate toward the bottom of a card's range, that's generally a pretty good outcome for that particular card.

Remember: If you pay your statement balance in full by the due date every month, you can avoid interest on purchases entirely. If you regularly carry a balance, though, APR should be one of the first things you compare when shopping for a card.

Your credit score can make a big difference in the interest rate you're offered. The Consumer Financial Protection Bureau's latest credit card market report shows how average APRs vary by credit score. For general-purpose credit card accounts opened in 2024, borrowers with higher credit scores generally received lower APRs:

  • Under 620: 30.0%

  • 620–639: 29.9%

  • 640–659: 29.4%

  • 660–679: 29.2%

  • 680–699: 29.0%

  • 700–719: 28.7%

  • 720–739: 28.2%

  • 740–759: 27.3%

  • 760+: 25.8%

But even borrowers with scores of 760 or higher paid an average APR of 25.8% on newly opened accounts, according to the CFPB's data. So excellent credit doesn't necessarily mean you'll qualify for what most people would consider a low interest rate. It does, however, improve your odds of getting a lower rate than someone with a weaker credit profile.

If your credit needs work, focus on the basics before applying for another card:

  • Pay every bill on time. Payment history is a major part of your credit score, so at minimum, make every payment by the due date.

  • Pay down your credit card balances. Using less of your available credit can help lower your credit utilization.

  • Check your credit reports for errors. If you find inaccurate information, dispute it with the credit bureau reporting it.

  • Don't apply for credit you don't need. New applications can result in hard inquiries on your credit reports.

You don't need a perfect credit score before applying for a card. But if a low APR is your priority and your credit has room to improve, waiting may give you more options.

Your APR is an annualized interest rate, but credit card interest is generally calculated much more frequently. Many issuers calculate interest daily based on your average daily balance. If you carry a balance, interest can continue to add to what you owe as you move through the billing cycle.

Most credit cards also offer a grace period on purchases. This is the time between the end of your billing cycle and your payment due date. If your card has a grace period and you pay your statement balance in full by the due date, you generally won't owe interest on those purchases.

If you tend to carry a balance, things get more expensive. You may lose your grace period, which means new purchases can begin accruing interest from the transaction date. That's one reason credit card debt can grow so quickly.

You don't really need to calculate credit card interest yourself — your statement will tell you how much you've been charged. But doing the math can help you see what carrying a balance actually costs.

You'll need three numbers:

  • Your APR

  • Your average daily balance

  • The number of days in your billing cycle

First, divide your APR by 365 to get your daily periodic rate. For this example, your APR is 24%:

0.24 ÷ 365 = 0.0006575

Let's say your balances throughout the billing cycle work out to an average daily balance of $3,600:

$3,600 × 0.0006575 = about $2.37 in interest per day

Over a 30-day billing cycle:

$2.37 × 30 = about $71 in interest

Note: $71 is an estimate — the exact amount depends on your issuer's calculation method and the purchases and payments you make during the billing cycle.

One credit card can have several different interest rates depending on the type of transaction.

  • Purchase APR: This is the rate that applies to purchases you make with your card. It's usually what people mean when they talk about a credit card's APR.

  • Balance transfer APR: This applies to debt you move from another credit card. Some cards offer an introductory 0% APR on balance transfers for a limited time.

  • Cash advance APR: This applies when you borrow cash against your credit line. Cash advances are particularly expensive because they often have a higher APR and begin accruing interest immediately.

  • Penalty APR: Your issuer may apply a higher interest rate in certain situations, such as when your minimum payment is more than 60 days late. Check your card agreement for the exact terms.

  • Introductory APR: Some cards offer a temporary low or 0% APR on purchases, balance transfers, or both. Once the promotional period ends, the card's regular APR applies.

Most credit cards have variable APRs, which means the interest rate can change over time. Variable credit card rates are commonly tied to an index such as the prime rate. The issuer then adds its own margin to determine the card's APR. So if the prime rate changes, your APR can change too.

Fixed-rate cards are less common. And "fixed" doesn't mean the rate can never change — it means it doesn't rise and fall with an underlying index in the same way a variable APR does.

If you're trying to avoid interest for a specific period, a 0% introductory APR card may be more useful than simply looking for the lowest ongoing rate. Depending on the card, you may get 0% APR on purchases, balance transfers, or both for a set promotional period. That can give you time to pay off a large purchase or existing credit card debt without adding interest along the way.

Balance transfers generally come with a fee, so factor that into your savings. And the 0% rate doesn't last forever. Once the promotional period ends, any remaining balance is subject to the card's regular APR. The goal shouldn't be to move debt around indefinitely; use the interest-free period to pay it down.

Start with the APR range listed in the card's rates and fees. For example, if one card offers a 18%-28% variable APR and another starts at 23%, the first card at least gives qualified applicants the opportunity to get a lower rate.

But don't look at the purchase APR alone. Check the card's rates and fees disclosure for its:

  • Purchase APR

  • Balance transfer APR

  • Cash advance APR

  • Penalty APR (if applicable)

  • Annual fee

  • Balance transfer fee

  • Cash advance fee

  • Late fees

Also pay attention to what happens after any promotional APR ends. A long 0% offer may look great now, but the ongoing APR matters if you can't pay off the balance before the promotion expires.

You have a few options if you're paying more interest than you'd like.

If you're looking for a new card, a stronger credit profile may help you qualify for a lower rate. You don't necessarily need to obsess over getting your score as high as possible. The point is to improve the things you can control — especially paying on time and reducing your balances — before you apply.

Call your credit card company and ask for a lower APR. There's no guarantee you'll get one. But if you've had the card for a while, consistently paid on time and improved your credit since opening the account, it's worth asking. If you're struggling to make payments, ask about hardship options too. Some issuers may offer temporary reduced rates or payments.

If you're carrying high-interest debt, a balance transfer card with an introductory 0% APR can give you some breathing room. Just do the math first — compare the balance transfer fee with the interest you'd otherwise pay, and figure out how much you'll need to pay each month to eliminate the balance before the introductory period expires.

Even a "good" credit card APR is still expensive. The simplest way to avoid interest on purchases is to pay your full statement balance by the due date each month.

If you can't pay the whole balance, pay as much as you reasonably can above the minimum. The faster you bring down the balance, the less interest you'll pay. And if you're already carrying a large balance, adding new purchases to the card can make it harder to get out of debt. It may make sense to stop using the card temporarily while you focus on paying it down.

Questions? Comments? News to share? Reach the Personal Finance Credit Cards Team at credit.cards@yahooinc.com

Editorial Disclosure: The information in this article has not been reviewed or approved by any advertiser. All opinions belong solely to Yahoo Finance and are not those of any other entity. The details on financial products, including card rates and fees, are accurate as of the publish date. All products or services are presented without warranty. Check the bank's website for the most current information. This site doesn't include all currently available offers. Credit score alone does not guarantee or imply approval for any financial product.