No matter their credit history or spending habits, nearly every credit card holder today must come to terms with one universal fact: Credit card interest is expensive.

With annual percentage rates (APRs) soaring past record highs, carrying a balance on any card is going to cost a significant sum.

If finding a lower interest rate is an important part of your search for a new credit card, you do have some options — even in the current interest rate environment. Here’s what you need to know about securing a good credit card APR.

What is a credit card APR?

The APR is the annualized amount of interest charged on your credit card balances.

APR doesn’t only apply to credit cards — you’re also assigned an APR when you take on a personal loan, mortgage, or auto loan. However, credit cards are notorious for carrying among the highest APRs for borrowers. If you fall behind on credit card payments or can only meet the minimum payment required, your balances will grow swiftly as those steep interest rates kick in.

Here are a few more things to know about credit card APRs:

• Credit cards have variable APRs. This means your credit card APR is likely to change over time. If your issuer does increase the card’s interest rate, you’re typically entitled to at least 45 days’ notice.

• Credit card interest compounds daily. Any balance left on your card after your monthly due date will begin to accrue interest at a daily rate. Each day, your current balance can increase by a percentage equal to your APR divided by 365 — which is why credit card debt can rapidly grow.

• Credit card APRs are based on the prime rate. Because the prime rate depends on the Federal Reserve’s target federal funds rate range, credit card interest rates tend to increase with Fed rate hikes. Look for a note in your card agreement describing the percentage your issuer adds to the prime rate to determine its variable APR range.

Does your credit card have a good APR?

Credit card APRs vary by a lot, so it’s difficult to nail down one rate as “good” over another. If you’re not familiar with where current credit card interest rates stand, you may be surprised just how high they can go. In fact, even cards reserved for the most creditworthy applicants can charge incredibly high interest on debt balances.

Before you submit a new credit card application, look for the variable APR range listed on the issuer’s site. This is the range your assigned APR will fall within, and usually spans about 10%. Plenty of factors go into your actual credit card APR, including the type of card, your credit history, and more. But getting an assigned APR at the lower end of the card’s overall range may be a rate you consider “good.”

Comparing different credit cards’ interest rates can help you get a better idea of what you consider a “good” rate. If you see a card with an abnormally high APR compared to others on the market today, you may want to steer clear. That rate will likely only continue to increase over time, and the card may also carry additional rates and fees that can add to its overall cost.

Average credit card interest rates

You might also consider your credit card APR good if it’s below the current average. But that can make for a tricky barometer when today’s averages are at the highest recorded levels.

According to the most recent Federal Reserve data, the current average interest rate across credit cards in the U.S. is about 21.19%. However, the average is even higher for cardholders who actually carry a balance. Including only credit card accounts that accrue interest, the average goes up by more than a full percentage point, to 22.77%.

So regardless of how you use your credit card, you’re pretty likely to earn upwards of 20% interest in the current rate environment.

4 types of credit card APRs

Credit card APRs can apply to different types of transactions you make with your card. Here’s a look at how they can differ between transaction types.

1. Purchase APR

This is the most commonly used credit card APR, and applies to new purchases you make with your card. You can usually find your card’s purchase APR at the very top of your card agreement. Each month, you’ll have around 21-30 days between the end of the billing cycle and the due date to pay your balance without interest. After that date, you’ll begin accruing interest on your new purchases at your card’s purchase APR.

This rate will fall within the credit card issuer’s stated variable APR range, but your credit history can play a big part in the actual rate you’re assigned. The better your credit when you apply for a new credit card, the better your chances of qualifying for a lower purchase APR. If you have bad credit, you may not be able to qualify for the best rates.

2. Cash advance APR

You should probably avoid making cash advances with your credit card whenever possible. Essentially, this transaction is a type of short-term loan against your credit line. It’s also extremely costly.

The APR you’ll pay on a cash advance is likely much higher than your standard purchase APR. Unlike new purchases, cash advances have no grace period. Interest will kick in on the day you make the cash advance transaction.

3. Introductory APR

Introductory APR credit card offers are relatively common. Typically, they involve an introductory 0% APR on new purchases, balance transfers, or both for a limited time. Common intro periods today range from 12 to 18 months, and up to 21 months.

If you have existing debt or plan to make a large purchase in the near future and want extra time to pay it off interest-free, finding a card with an introductory APR offer could be a smart financial decision. Just make sure you understand all the terms of the offer (including added fees) before applying.

4. Penalty APR

Penalty APRs are among the most expensive charges you can take on as a cardholder. Issuers typically impose penalty APRs when you make late payments or your payment is returned, leaving your balance unpaid. You can avoid this charge by paying at least the minimum toward your balance by the due date.

If you do take on a penalty APR, that doesn’t mean it’ll last forever. In many cases, you can get your APR lowered again after a series of consecutive on-time payments.

How to get a lower credit card APR

Despite today’s very high credit card rates, there are some actions you can take to improve your chances of getting a lower APR.

Improve your credit score

Your credit history plays a big part in the APR you’ll receive. If you’ve consistently paid your bills on time in the past and can show that through a positive payment history on your credit report, you’ll be most likely to qualify for the best rates.

If you don’t already have a great credit history, you may want to focus on improving your credit before you apply. Remember, even the best credit will only get you assigned a variable rate at the lower end of any card’s stated APR range — which is often upwards of 15% APR.

Consider the card type

The type of card you apply for can influence its APR, too. The top end of one credit card’s variable APR range may be the low end of another card’s range.

If you’re looking for a high-value rewards credit card with premium benefits, you can count on a high APR. On the other hand, some cards designed for beginner cardholders or those looking to improve their credit may have slightly lower interest rates. Today’s elevated rate environment has skewed that comparison a bit, though. In general, nearly every credit card now carries a steep ongoing APR.

One way to avoid these rising interest rates in the near term is with a card offering 0% interest for a limited time on new purchases or balance transfers. The 0% APR introductory offers on these cards can be useful for making an upcoming big purchase or existing debt. Just make sure you have a plan to pay off your balance before the intro period ends.

Talk to your issuer

It’s possible to get a better interest rate without actually opening a new credit card. In some cases, you may be able to request a lower APR on an existing credit card by contacting your issuer.

Negotiating with your credit card company isn’t a guaranteed solution, but it doesn’t hurt to ask. Before doing so, make sure you’ve built up a history of timely payments on the card. You may also be more likely to get the lower rate if you can show that your credit score has improved since you first applied.

One more thing: Avoid interest altogether

No matter how “good” a credit card’s APR is, accruing interest on your balances will always cost you more money over the long term. Paying your balances in full and on time each month is the best way to guarantee you pay as little interest as possible — by avoiding it completely.

Especially in today’s interest rate environment, even the lowest ongoing variable credit card APRs can lead to long-lasting, high-interest debt and add thousands to your balance over time.

If a low APR is a priority for your new card search, consider your spending habits and what steps you can take to avoid taking on interest. It may help to think of your credit card as a debit card — focus on spending only what you know you can afford to pay off when your bill is due. Even if that’s not always possible, try to at least have a plan to eliminate debt as quickly as possible anytime you need to carry a balance.

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