Credit Info What is a Good APR Read the Article Open Share Drawer Share this:Click to share on Twitter (Opens in new window)Click to share on Facebook (Opens in new window)Click to share on Tumblr (Opens in new window)Click to share on Pinterest (Opens in new window)Click to share on LinkedIn (Opens in new window) Written by Mint.com Published Jul 9, 2019 - [Updated Jun 1, 2022] 6 min read Sources Advertising Disclosure The views expressed on this blog are those of the bloggers, and not necessarily those of Intuit. Third-party blogger may have received compensation for their time and services. Click here to read full disclosure on third-party bloggers. This blog does not provide legal, financial, accounting or tax advice. The content on this blog is "as is" and carries no warranties. Intuit does not warrant or guarantee the accuracy, reliability, and completeness of the content on this blog. After 20 days, comments are closed on posts. Intuit may, but has no obligation to, monitor comments. Comments that include profanity or abusive language will not be posted. Click here to read full Terms of Service. An APR is the annual percentage rate you will pay on a loan. You will see the term APR come up when you’re shopping around for a new credit card or mortgage loan. This rate can affect your wallet in a big way so it’s important to understand your APR before you consider making a big financial decision. Read on to learn more. What is a Good APR for a Credit Card? The APR on your credit card is the interest rate stated as an annual rate. Your interest charges are calculated monthly and added to your credit card balance. If you pay your balance in full, no interest is added typically. For all types of credit, a lower APR means a lower interest charge, which can save you money in the long run. But depending on your situation, you may be willing to pay a higher rate in order to reap more benefits. For example, rewards cards and store credit cards usually have higher APR because of the benefits awarded to the card owner. A single credit card can have multiple APRs depending on the type of transaction taking place. Cash advances, for example, typically have a higher APR attached. The five most common types of APRs on your credit card are purchases, balance transfers, cash advances, introductory rates, and penalty rates. Introductory rates allow you to utilize low or 0 percent APR when you first open your account but this rate will often increase over time. In addition, a credit card company is typically allowed to increase your APR within 45 days notice based on a number of different factors. Some factors that affect APR changes include: late payments, credit limit, national prime interest rate hikes, and bank earnings. Just as an APR can increase, it can also decrease. Companies traditionally offer lower interest rates to their best customers so if you keep your credit score high, you may increase your chances of qualifying for a lower rate. When you register for a card, it’s important to know if your APR is a fixed or variable rate as this impacts how often your APR will change. Read on to learn the key differences: Variable APR: Variable-rate credit cards are the new normal. Most cards you come across will have a variable APR that may change monthly or quarterly based on an index rate. One index rate is the prime rate, which is impacted by the federal funds rate set by the Federal Reserve. If you pay your balance in full each month, the fluctuating APR will not impact you as you will not owe any interest on your purchases. Fixed APR: Fixed-rate credit cards are less common these days and if you are looking for a rewards card, you likely won’t find it here. The fixed rate means that your rate will not change as the prime rate fluctuates and your cardholder will have to issue a 45 day warning to you before other factors, such as late payments or credit score changes, hike up your rate. Deciding whether to pick a variable or fixed APR is one of the many decisions you’ll have to make when choosing a credit card. Discover more tips and tricks on how to choose a credit card here. What is the Current Average APR? According to the Federal Reserve, the average APR in the second quarter of 2019 is at 17.68 percent. Credit cards with higher rewards will often have a higher APR. The lower the APR, the better, so take these current rates into consideration when you’re shopping for a new card. How Do I Lower My Credit Card APR? Want a lower APR? If you have a balance on your credit card at the end of the month, a lower APR will save you money. If you pay your credit card balance in full each month, your APR will not affect your wallet because you aren’t paying interest on purchases you’ve paid in full. 43.3 percent of cardholders are “revolvers,” which means they carry over balance each month and pay interest on that balance. Annually, this costs the average American $855 a year in interest alone according to a report from TransUnion. One way to lower your annual interest spending is to take steps to lower your APR. Here are some tips and tricks that may help to lower your APR: Negotiate: Most people don’t know that your APR on any of your existing credit cards can be negotiable — but it totally can be. Sometimes it can be as easy as calling and asking for a lower rate, although this option requires a hard credit pull which can impact your credit score. Other times, you may have to be more persistent. Consider asking for a manager if the first person you get on the phone isn’t budging. You may even want to mention how long you’ve been with the company and tell them available rates from competitors. Raise your credit score: A strong credit score is a big factor when companies are deciding whether or not to lower your APR. If you have a good or excellent credit score, companies may believe you are more likely to pay your bills promptly and not default. You can find out more on how to potentially raise your credit score here. Look for balance transfer deals: You could potentially pay no interest for 12 to 18 months if you do a balance transfer deal from your old card to a new card. There may be an initial balance transfer fee, usually around 3 to 5 percent of the total amount transferred, but many times this is well worth the money you will save with zero interest. What is a Good APR for a Mortgage? Your mortgage is the loan you receive from a bank or lender that assists you in buying a home. Learn more about mortgages and how to find the right one for you here. Just like a credit card APR, a lower mortgage APR means more monthly savings on your house payments. A mortgage APR includes interest plus other costs and fees associated with the loan. Because so many different factors can affect your mortgage APR, it’s important to shop around when you are looking to buy a house. This is a huge investment and comparing rates can save you money. What is the Current Average Mortgage APR? The average mortgage APR is impacted by factors such as the housing market, the state of the economy, and by the type of mortgage loan you have. According to MarketWatch, the average mortgage rates in the first quarter of 2019 were as follows: The 30-year fixed-rate mortgage averaged 4.46% The 15-year fixed-rate mortgage averaged 3.89% You want to try to get an APR at or below the national average, but factors such as your financial history and the amount of your down payment can prevent you from qualifying for the best rates. Ultimately, it’s up to the lender to decide what your APR will be. Final Notes Keeping yourself informed is the best way to keep track of your financial health. Use the tips above to help you understand your APR before you sign, as this rate can impact your wallet in a big way. Making big financial decisions such as opening a credit card or qualifying for a mortgage can seem intimidating, but if you do your research you may end up saving big. Additional Resources: Mortgage Rates Credit Card APR Credit Card Disclosures TransUnion | MarketWatch | American Business Association | Federal Reserve | Investopedia Previous Post Getting Approved for Your First Credit Card Next Post Why Financial Freedom Is All About Options Written by Mint.com More from Mint.com Sources Browse Related Articles Mint App News Intuit Credit Karma welcomes all Minters! 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