Alex Johnson, Member
@nobarter
Mastercard interest rates are 10.74% to 36%, depending on the card and each applicant’s creditworthiness. Nearly all Mastercard interest rates are variable rather than fixed. Variable rates are tied to an index rate, usually the prime rate that banks use for their most creditworthy customers. Setting specific interest rates is a card issuer’s job, though, not Mastercard’s.
Generally, the better your credit history, the better the interest rate. For example, the Bank of America Cash Rewards Mastercard interest rate ranges from 16.24% to 26.24%, depending on your credit. Credit card type also affects the interest rate. Most secured credit cards offer a single rate, like Capital One Secured: 26.99% (V). Rewards cards like Citi ThankYou Premier – 17.49% to 25.49% (V) – often have higher maximum interest rates to compensate for the additional benefits .This could also be a sign that more than just people with excellent credit can get approved.
Notable Mastercard Interest Rates:
- Lowest Mastercard interest rate: 10.74% (First Progress Platinum Prestige Mastercard Secured)
- Highest Mastercard interest rate: 36% (First Premier Bank Mastercard)
- Best 0% Mastercard (balance transfer): 0% for 21 months(Citi Simplicity)
- Best 0% Mastercard (purchases): 0% for 18 months (HSBC Gold Mastercard Credit Card)
Credit cards will always have multiple interest rates. There are separate rates for purchases, balance transfers, cash advances and late payments. Cash advance APRs range from 24.99% to 26.99%. Penalty interest rates for late payments can be a maximum of 29.99%. The Barclaycard Arrival Plus and Citi Simplicity cards do not have penalty interest rates, for example.
If a Mastercard with the lowest possible interest rate is your priority, you may need to look beyond the big banks and explore options from credit unions. Credit unions have specific membership requirements, so check to make sure you’re eligible.
JAMIE THOMPSON, Retired Accountant
@ExTaxMan
Mastercards for bad credit can have interest rates as high as 36%.
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What does 0% APR mean?
A 0% APR means that you pay no interest on new purchases and/or balance transfers for a certain period of time. The best 0% APR credit cards give 15-18 months without interest. But the average 0% APR intro period is about 10.5 months for cards offering 0% purchases. And it’s around 12 months for the average card with 0% on transfers.
A 0% APR does not keep you away from monthly payments, nor does it completely remove interest out of the equation. You still have to make monthly minimum payments to keep your 0% APR. And if you don’t pay off your balance by the end of the 0% intro period, you’ll have to pay interest on whatever balance remains. The penalty is even worse with many retailers’ 0% financing offers. If you don’t pay off your full balance in time, interest will retroactively apply to your entire original balance – as if the 0% APR was never there.
There are a few other things you should keep in mind when thinking about 0% APRs, too.
0% APR Key Takeaways:
- You pay no interest on your purchases and/or balance transfers for 2 to 21 months, depending on the card.
- 0% APRs make debt cheaper to pay off, which helps you get out of debt faster.
- A 0% APR does not free you from the responsibility of making monthly payments. You must pay at least your monthly minimum to avoid being classified as late. Late payments damage your credit score.
- Zero percent credit cards tend to have fairly high regular APRs. So you should strive to bring your balance to zero by the end of the 0% APR period, when regular rates take effect.
It’s also important to note that you won’t only find 0% APRs on credit cards. You may see auto loans with them, for example. Just be sure to always read the terms in detail before signing. You don’t want to end up with deferred interest instead of a true 0% APR.
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