What Is A Good Interest Rate For A Credit Card? | CreditShout

What Is A Good Interest Rate For A Credit Card?

By Dan Rafter / June 16, 2019
What Is A Good Interest Rate For A Credit Card


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Honestly, there’s no one “specific” interest rate users shoot for, but the lower that rate is, the better.

Interest rates can differ a lot and there’s a number of different factors that can influence the type of interest rates you’re going to be offered.

Citing the latest data from the US Federal Reserve – as of 2018:Q4 – US average credit card interest rates currently sit at 14.73% and 16.86% respectively.

Just so we have a baseline to work with, 16.92 percent is the national average APR here in the United States.

The average interest rate on credit card accounts that are being charged interest is lower at 15.54 percent. Credit cards with a low interest are much lower, coming in at 13.99 percent.

Cash back credit cards are much higher, averaging 17.09 percent. Even worse, credit cards for bad credit averaged a terrible 24.18 percent APR.

At the very least, you’ll be able to use this data as a tool to understand what interest average consumers get.

If you’re being offered better interest rates than the averages on the categories above, we’d consider you’re doing well.

There’s one big lesson to learn visually seeing this data. If you want a good interest rate on your credit card, you better have good credit.

Simple, but true, your overall credit plays a big role in the interest you’re going to pay for credit cards. As you’re going to learn in this article, there’s a few things you can do to start working on getting lower interest rates, more on that soon.

Before we get to that, there’s going to be scenarios where interest plays a big role and other scenarios where interest don’t matter. I have an example for you.

Let’s say you’re going for a reward credit card that has 18 percent interest. If you’re going to be paying the balance off every month on that card, the 18 percent interest is irrelevant.

You won’t have to worry about interest in this scenario as you’ll be paying the complete balance every month.

Now, if you’re getting a credit card that has a 18 percent interest rate to pay off all of your credit card debt, that changes everything. In this scenario, the 18 percent interest becomes high.

See how that works?

Every scenario is different, so it depends on what you’re using the credit card for and how you plan paying for transactions each month.

No matter what scenario you’re in, you always want to try and get the lowest interest percentage you can. Unfortunately for some of you, that may be easier said than done.

As we said earlier, your credit scores heavily influence the interest rates you can get.

Due to this, we’ll spend the rest of the article to help you determine what interest rates you should be going for depending on your specific credit scenario.

What Is A Good Interest Rate For A Credit Card?

For those of you that have a credit score below 600, you’re likely going to have a difficult time getting a good interest rate.

For those of you that have a credit score below 600, you’re likely going to have a difficult time getting a good interest rate.

With that being said, getting a few credit cards going to build your credit up is essential. You want to be responsible with your credit cards.

The best scenario for you with a high interest credit card is always paying your balance in full every month.

If you have a balance carrying over every month, you’re going to be paying a lot in interest.

The good news, there’s a lot of ways to begin building your credit. If you’re finding it difficult to near impossible to be approved for a credit card, try a secured credit card.

With a secured credit card, you do have to deposit money to get approved. If you want a $200 line of credit, you’ll have to deposit $200 up front.

While this one is tough to swallow for most, this does allow you to start building your credit and that’s a great thing. You’re also very likely to get approved for a secured card.

I’d also recommend building a relationship with your local lenders. Open a checking account with them, a savings account and build goodwill with them.

In your time of need, they may be able to work with you where others could not.

You should always aim for the lowest interest rate available to you, but the best interest rate you can get will depend on your credit score.

Here are some guidelines to help you figure out what interest rate you should aim for based on your credit.

If you’re having trouble building your credit, you’ll find a number of resources here on the website.

For Those With Good Credit

If you have good credit, you won’t need a secured credit card. Now, companies may be offering them to you, but you can turn those offers down.

Secured credit cards are good for those with bad/fair credit, but they have high interest rates.

You’re going to be looking for interest rates between 12-15 percent. I want to dial this in just a little more.

Good credit is going to start around a 650 credit score or higher. If you’re in the 600-649 bracket, you’re likely looking at 16-18 percent on average.

When you consider all the major credit card companies and what they charge in interest, anything below 15.50 percent is going to be fair if you have good credit.

Obviously, if you can get it lower, by all means do so.

You should also have a few 0 percent APR offers too. These are great for paying off credit card balances.

These credit card offers usually give you 12-15 months to pay off the balances. You just want to always make sure you can pay those balances off within that time frame.

For Those Who Have Very Good/Excellent Credit

What Is A Good Interest Rate For A Credit Card?

If you have very good to excellent credit, there’s a ton of opportunities out there for you to exhaust. In most cases, you’re going to qualify for the best credit card offers on the market.

Go you! There’s no question, you can get a great low interest rate, so make sure you do so!

It’s not uncommon for those with great credit to never leave a balance on their credit card. Rewards may be more important to you than interest.

As we said earlier, there’s always different scenarios that play a role in all of this.

You’re going to qualify for the best reward cards possible, so if you won’t be carrying a balance every month, I wouldn’t worry much about the interest.

Wrapping It Up

As you now know, your credit plays a big role in the interest you pay on your credit scores.

You always want to me mindful of your credit, make sure you’re monitoring your credit regularly.

If you haven’t been checking your credit and you want to start doing so, be sure to subscribe to our list here at Credit Shout. We have a ton of great resources to help you.

You can also sign up for Credit Karma and Credit Sesame, both of them are free.

However, these 2 platforms allow you to keep a close eye on your credit and that’s very important.

Both of these platforms have a free account but they do have paid accounts too.

The editorial content on this page is not provided by any of the companies mentioned and has not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are the author's alone. Additionally, the opinions of the commenters are not necessarily the opinions of this site

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