A low APR means that you will pay less in interest on purchases or balance transfers than the average regular APR for a credit card. The best low APR credit cards offer 0% interest on both purchases and balance transfers for a set number of months. Not all low APR offers have 0% introductory rates, though – there are also cards with regular rates below the market average for new credit card offers (18.89%).
Key Things to Know About Low APRs
Your APR is determined by your creditworthiness
When you’re approved for a credit card, you will be assigned a regular APR from the card’s advertised range, 12.99% - 24.99%, for example. Issuers will assign your APR based on factors such as your credit history, income, and debt level, among others.
A good regular APR for a credit card is about 14% or below, which is a range usually set aside for applicants with excellent credit. You can find the APR for your credit card under the APR section on your monthly statement.
Credit cards with low regular APRs will likely have higher rates than most loans
Personal loans typically have lower APRs than credit cards. Just like with credit cards, the interest rate you’ll receive for a personal loan depends on your credit history, among other factors. Credit cards are still the better bet for interest-free financing, however, as no major lenders offer 0% APR personal loans.
The average APRs for auto loans and mortgages are also lower than the average credit card APR, though your credit score is critical in determining the exact interest rate you’ll receive. Applicants with very low credit scores could end up with an APR on par with, or even above, the average credit card interest rate.
Low credit card APRs only matter if you carry a balance from month to month
If you pay your credit card bill in full every month, you need not worry about a low APR because the rate will never apply. When you carry a balance from month to month, though, a low APR makes a difference in how much interest you’ll pay.
Some low APR offers aren’t always what they seem
Many retailers offer 0% interest promotions that use something called deferred interest. This means that while you’re paying no interest over the short term, interest dating back to the original purchase date will be retroactively applied if you don’t pay off the entire balance before the promotional period ends.
Promotional APR offers aren’t limited to new cardholders
While most 0% intro APR offers on new purchases and balance transfers are geared toward new cardholders, existing cardholders may occasionally receive 0% or reduced APR offers. Issuers typically extend these offers based on your credit history and how you manage the existing account.
To see if a low APR credit card will work for you, check out the best credit card rates selected by WalletHub’s editors.
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