What is a Good Credit Card Interest Rate?

MAR 13, 2012

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Youre shopping around for a credit card with the most benefits, but are you paying for your perks in the form of a high interest rate? Although fees, grace periods, credit limits and rewards are important features to consider when comparing credit cards, in the end, its the interest rate that can make or break your monthly balance. Before you can measure the true value of a credit card, youll first need to learn: what is a good credit card interest rate?

First and foremost, there is no one interest rate that is considered a good rate. While creditors often offer an annual interest rate that varies from 9.99 percent to 24.99 percent, seeking the lowest rate you can secure with your credit score is your best bet. Overall, most credit experts discourage you from obtaining cards with interest rates higher than 20 percent; however that can vary based on your spending style.

Spending Style

For those who tend to carry a balance from month-to-month, a credit card with a high interest rate can make it difficult to manage your payments. High interest rates can add significant charges to the bottom line, increasing your balance each month when not paid in full. However, a credit card with a higher interest rate combined with a credit card rewards program may not be a point of concern for those who pay off their balance each billing cycle. Overall, if you carry a balance from month to month, look for the lowest interest rate for which you qualify.

Introductory Interest Rates

Be aware that many lenders offer a zero percent or low introductory rate, which can last anywhere between three months to two years. Before you choose a credit card for the tempting good rate, read the fine print and make note of the rate that will be attached to your account once the teaser rate expires and the length of time the introductory interest rate is valid.

Ultimately, determining what a good credit card interest rate is should involve consideration of your spending style, the benefits of the particular credit card, and your credit score. Your credit score will determine the types of rates you qualify for, so check your credit report and score to give you a realistic idea of the interest rate you deserve.