What is a good APR on a Credit Card?
Friday, January 3 CCCU
Credit Card Education: What is a Good APR on a Credit Card?
What is a good APR on a credit card? What does APR mean? Consolidated Community Credit Union answers common questions around Annual Percentage Rates and more to help you manage a credit card successfully.
Interest rates on credit cards have gone up in recent years. When you don’t pay your balance in full each month
, interest fees begin to accumulate. If you’re not careful, you may end up paying thousands of dollars in interest on top of the credit you’ve used. Nevertheless, credit cards are useful financial tools
as long as you use them responsibly, particularly if you have one with a good APR. So, what’s a good APR on a credit card? Learn the answer to this question and more below.
What Does APR Mean?
Many of our Portland credit union members ask us, “What’s a good APR and what does it mean?” APR stands for Annual Percentage Rate. If you’re on the hunt for a credit card, one of the most critical things to look for is finding one with a reasonable APR.
Here’s how it works: If the APR compounds monthly, you’ll divide the rate by 12 to get your periodic rate. When you don’t pay off your balance in full before the grace period ends, this rate is multiplied by your credit card balance and added to the total amount you owe. The grace period for a credit card is the window of time in which you can pay off what you owe without accruing any interest –– usually about 30 days for most banks or credit union lenders.
APR vs. Interest
What’s the difference between APR and interest? Interest is a fee incurred for borrowing from your line of credit. When it comes to credit cards, APR and interest
are the same things. If you’re looking into getting a mortgage loan, however, APR also accounts for additional fees such as broker costs, special discounts, or an origination fee. A low APR means incurring less interest on your purchases and cash advances.
Many borrowers intend to pay off their credit card balances in full before the grace period ends. However, the fact of the matter is that almost half of Americans
maintain a credit card balance month-to-month, and about 70% won’t be able to pay it off within a year. That’s something we want to help our Portland credit union members navigate easier.
What are the advantages of a good APR? With a good APR, you’ll have the peace of mind knowing that you won’t overburden yourself by accumulating interest if you can’t pay your credit card in full. You’ll also be able to pay off your debt quicker than you would with a higher rate.
What’s Considered a Good APR?
The average starting APR
for most credit cards in the U.S. is about 15%. In some cases, a credit card APR will increase in increments. For credit lines that accrue interest, the average is closer to 17%. A good interest rate is typically considered to be below the average rate –– but an even better APR will be fixed, meaning it won’t increase over time. For example, Consolidated Community Credit Union offers credit cards with low APRs
below 10%, which is under the national average.
Most credit cards offer a range of interest rates. Acquiring a good APR will depend on your credit score and credit history. With a high credit score, you’re more likely to get a good rate. Borrowers with low scores tend to have a difficult time securing credit cards with low APRs. In some instances, you may not know what APR you’ll get until you’re approved for the card at bigger banks. Feel free to reach out to our Portland credit union if you have any questions about rates on our cards.
Visa Credit Cards from Consolidated Community Credit Union
Credit cards from credit unions offer lower APRs than most lenders. CCCU has several Visa cards to choose from, including personal credit cards and business lines of credit
. Our cards have no annual fees and free balance transfer
, making them a great choice for members to build credit and more.
Our Visa Classic
credit card is ideal for those who want to minimize the amount of interest they owe. With interest starting at 8.65% for purchases and 10.65% APR for cash advances, it’s the lowest rate we offer. CCCU’s Visa Green
card comes with a fixed rate of 9.95% APR. Starting at 9.65% APR for purchases and a rate of 11.65% for cash advances, CCCU’s Visa Signature Rewards
card is also perfect for those who can pay their balance in full each month. You can also earn rewards on every purchase, including airline miles, cashback, and gift cards.
Apply for a Visa credit card
from CCCU today, or stop by one of our conveniently located Portland branches to learn more about becoming a member of our credit union.