When it comes to credit cards, interest rates are a crucial factor to consider. A good interest rate on a credit card can help you save money on interest charges, which can add up quickly if you carry a balance from month to month. But what is considered a good interest rate on a credit card? Let’s take a closer look.
First of all, it’s important to understand that credit card interest rates are typically expressed as an annual percentage rate (APR). This is the amount of interest you’ll be charged on your credit card balance over the course of a year. Credit card APRs can vary widely depending on the type of card, your credit score, and other factors.
According to Bankrate’s latest Credit Card Rates Report, the average credit card APR for new credit card offers is currently around 16%. However, the APR you’re offered may be higher or lower than this depending on your creditworthiness.
So, what is a good interest rate on a credit card? As a general rule of thumb, a good interest rate is one that is lower than the average APR for new credit card offers. If you have good credit, you may be able to qualify for a credit card with an APR below 15%. If you have excellent credit, you may be able to qualify for an APR below 10%.
It’s important to keep in mind that credit card interest rates can be variable or fixed. A variable interest rate can change over time based on market conditions or other factors. A fixed interest rate, on the other hand, remains the same over the life of the credit card. Generally speaking, fixed interest rates are preferable because they offer more stability and predictability.
Another factor to consider when evaluating credit card interest rates is the type of card. Credit cards that offer rewards or cashback programs may have higher interest rates than cards that do not offer these benefits. This is because the credit card issuer needs to offset the cost of the rewards program.
Finally, it’s important to remember that interest rates are just one factor to consider when choosing a credit card. Other factors to consider include the annual fee, credit limit, rewards program, and other terms and conditions.
In conclusion, a good interest rate on a credit card is one that is lower than the average APR for new credit card offers. If you have good or excellent credit, you may be able to qualify for a credit card with an APR below 15% or 10%, respectively. It’s important to evaluate other factors, such as rewards programs and annual fees, when choosing a credit card as well. By doing your research and comparing your options, you can find a credit card with a good interest rate and other benefits that meet your needs.