What should I expect as a normal APR for credit cards?

normal APR for credit cardsThere is no number that qualifies as a normal Annual Percentage Rate or APR for credit cards. Given that APRs vary depending on various factors such as your credit history, your employment status, your other loans as well as the credit card company issuing the card, you can expect to see a range of credit card APRs.

So use the FREE credit card finder and choose the credit card that works best for you!

Choosing the credit card with the lowest interest rates is very important since the difference of a small percentage could add up to a large amount of money over a period of time. So making a little effort at the beginning by using the right tools will set you the on right path towards convenient saving.

Understanding Credit Card APRs

Annual Percentage Rate or APR is the interest you pay for any credit card balance that remains unpaid beyond a pre-determined period of time. Credit card APRs are yearly rates.

According to the Federal Reserve, interest rates vary in nature. Some of the different types of APR are:

  • Fixed-rate APR: This is a preset credit card interest rate that is established for a fixed period of time and cannot be changed during that time.
  • Variable-rate APR: This rate is open to fluctuation depending on factors outside the control of the credit card company. Such influencing indices include Treasury Bill rates or borrowing prime rates.
  • Introductory APR: This is the lower rate offered to you by the credit card company when you sign up and is likely to go up beyond the introductory time period. Under Federal Law, the introductory APR has to last for at least six months.
  • Penalty APR: This punitive credit card rate is triggered if you fail to meet certain conditions such as missed payments or returned payments.
  • Transaction-dependent APR: The credit card companies set one rate for normal purchases made using your credit card. However, in the case of actions such as balance transfers and cash advances, the rates will be different and often higher.

How Credit Card APRs Are Determined

Credit card companies use your FICO scores, popularly called credit scores to establish your credit card interest rate.

Credit scores are a numerical quantity that represents your creditworthiness or your ability to repay a loan in a timely fashion.

According to Consumer Fraud Reporting, your credit report, which includes personal identifying information (such as name, address, and social security number), your existing credit accounts and loans, reported bankruptcies and late payments, among others determines your credit scores.

There are some additional factors that influence your credit scores such as:

  • Your income
  • Amount of savings
  • Spending patterns
  • Your present interest rates on debt like auto loans, mortgage etc.
  • Your present debt

With the economy being in the doldrums, lenders such as credit card companies are closely scrutinizing individual credit reports to establish credit lines and APRs.

Since credit scores are so important, how can I find out about my credit scores?

Your credit profile is monitored by three separate credit bureaus: Equifax, Experian, and TransUnion. Under the Fair Credit Reporting Act, consumers have the right to one free credit report per calendar year. This free credit report can be found at Annual Credit Report.

It is very important to monitor your credit scores, to make sure that all your transactions are being correctly reported. Additionally, keeping a close eye on your scores helps detect and protect you from identity theft and credit card fraud.

Lowering Your Credit Card APR

Credit scores will rise if you show a pattern of financial responsibility by using your credit carefully, making all payments on time, whittling down existing debt, and increasing your income.

The easiest way to lower your credit card APR is to increase your credit scores.

Additionally, you can talk to your credit card company and negotiate a lower credit card interest rate. This is usually easier if you have good credit rating. In case of a poor credit history or no credit history, it is likely that your request will be denied. Before talking to your bank, do your research to see what is available to you and if the rates that you are presently getting are the industry standard.

Getting the Best Credit Card APR

In a nutshell, your credit history will determine your credit card APR. With tightening lending standards, low credit card rates might be difficult to come by, especially if you have less than stellar credit scores.

You can compare different credit card choices and their APRs, as well as the terms and conditions of different credit card offers using the FREE credit card chaser tool!

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Disclaimer: This content is not provided or commissioned by American Express, Visa, MasterCard, Discover, or any other credit card company or issuer. The opinions expressed here are the author's alone, not those of any credit card company or issuer, and have not been reviewed, approved or otherwise endorsed by any credit card company or issuer. Credit Card Chaser may be compensated through various affiliate programs with advertisers. As always, Credit Card Chaser is an independent website commmitted to helping people research credit card offers and find the best credit card!