What Is APR?

To find the interest rate on your credit card, look at your cardmember agreement and your monthly credit card statements. Your interest rate will be there in the form of an annual percentage rate (APR). But as “annual” implies, an APR is the cumulative interest rate for a whole year, which isn't all that helpful for calculating actual interest charges from day to day or month to month.

You can figure your daily interest rate – or daily periodic rate – by dividing your APR by 365 (days in a year) because credit card interest compounds daily. (It's worth noting that some card issuers may divide by 360 rather than 365). This calculation will give you the actual daily rate at which you accrue interest on a card. If your APR is 19.99%, your daily periodic rate would be 0.0547%.

The terms APR and interest rate are often used interchangeably. For general purposes, they express the same idea, though you'll get a much better sense of your actual “interest rate” by using the daily periodic rate.

It's worth noting that most credit card rates change (indicated in terms by a V next to your APR). So if the so-called prime rate that credit card APRs are tied to goes up, your rate will rise, too. A credit card agreement may note that the account's APR is the prime rate plus a certain fixed percentage. Or, your rate might rise to a penalty APR (also found in credit card terms) if you miss a payment. Your card issuer must notify you of a rate change 45 days before it takes effect, unless you're 60 days or more past-due on payment.

Though it's good practice to keep an eye on your APR, interest rates don't matter if you pay your credit card bill in full every month. If you aim to pay no interest, you won't have to worry about crunching these numbers.

Yes, 0% APR is the same as no interest, though only up to a point. While 0% APR means no interest in the short term, the 0% APR on a credit card offer is only an introductory deal that will be replaced by a higher regular APR at the end of the 0% intro period.

With most credit cards, the interest rate that takes effect after a 0% APR ends will only apply to any balance remaining at that point, plus future balances carried from month to month. With some store credit cards, however, the regular rate will retroactively apply to the original purchase amount if you don't repay what you owe by the end of the 0% promo period.

Finally, if you have a 0% APR offer, understand that it does not excuse you from making payments on your account each month. In fact, you could lose your 0% APR if you fail to pay the minimum amount by the due date.

An introductory APR on a credit card is a promotional interest rate that issuers often give new customers for a set number of months after they open an account. 

What you should know about credit card introductory APRs:

• Some credit cards offer introductory APRs on purchases, balance transfers, or both. The rate is lower than the regular APR, often as low as 0%. The average length of an introductory 0% APR promotion is 12 months for purchases and 13 months for balance transfers. Intro periods generally range from 6 to 18 months. Some cards will occasionally offer a 0% APR for 21 months.
• When a credit card has an introductory APR of 0%, that means that you will not be charged any interest on purchases, balance transfers, or possibly both during that period. This is a particularly helpful feature if you're planning on financing a large purchase over time. It can also lower the cost of paying back any existing debts that you transfer to your card. You can focus on paying down the principal balance without new interest charges.
• After the introductory period ends, new purchases and any leftover balance will be subject to the card's regular APR.
• If you pay late or fail to make at least the minimum payment during the introductory period, the issuer may cancel the reduced rate. The regular APR would then apply to the existing balance and any future purchases.
• Keep in mind that a store credit card APR promotion usually involves something called deferred interest. You get a low introductory APR with this type of promotion. But if you don't repay your balance on schedule, the higher regular APR will be applied to your original purchase amount – not just whatever balance is remaining at the time.

Here are some popular 0% APR credit cards:

Feel free to also visit our 0% APR credit cards page for a list of some of the top credit cards with 0% intro rates on purchases. You can also check out our editors' top picks for the best balance transfer credit cards available right now on the market to weigh your options.  

A good APR for a personal loan is below 12% if you have excellent credit. The further from excellent your credit score is, the closer to the lender's maximum APR your rate will be and the more interest you'll have to pay over time. Below you can see what a good APR is for each credit level.

Good APR for a Personal Loan by Credit Level

Note: A “good” APR is lower than the average APR per credit level.

The best way to see if you can get a good APR for a personal loan is to pre-qualify before you officially apply. You can then narrow down your search to the lenders that offer you the lowest rates. To estimate your potential rates from multiple lenders, check out WalletHub's free pre-qualification tool.

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 (22.15%).

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.

The difference between APR and interest rate on a personal loan is that the APR includes fees while the interest rate does not. Both the interest rate and the APR measure the cost of borrowing over a year's time, and both are expressed as a percentage rate. While these terms are fundamentally different, they are often used interchangeably and can be equal in cases where the loan has no fees.

One situation where the APR on a personal loan would be higher than the interest rate is if the lender has an origination fee whose cost is spread out over the life of the loan. An origination fee is a charge for initially processing the loan. Many lenders make you pay the fee upfront or deduct it from the amount you receive, in which case the cost is not included in the APR. However, other lenders divide up the cost of the origination fee between your payments. In that situation, your APR is your interest rate plus the yearly cost of the origination fee.

Here's an example from the lender FreedomPlus: A borrower's interest rate could be 15.49%, but their APR might be 18.34% because of the origination fee. Certain lenders may charge other fees that get included in the APR as well, but it's unusual to see anything other than an origination fee with personal loans.

A good APR for a first credit card is anything below 20%. Most first-timers have no credit history, so they need to prove themselves as responsible borrowers before getting a really low APR. But there are some exceptions. Student cards also give lower rates, but you have to be a student to get one. Another way to get a good APR for a first credit card is to apply for a secured card.

It's worth pointing out that carrying a balance on a secured card doesn't make much sense anyways. You can't buy anything that you wouldn't be able to afford without the secured card. That's because your spending limit is equal to the amount of your deposit. 

Some of the Best First-Time Credit Cards with Good APRs

Regular APR: 11.74% (V)

Ongoing Rewards: 1.5 points for exchange and commissary purchases and 1 point for every dollar spent on all other purchases

Annual Fee: $0

Minimum Credit Required: Limited History

Regular APR: 31.74% (V)

Ongoing Rewards: 5% discount on all purchases

Annual Fee: $0

Minimum Credit Required: Fair credit

Regular APR: 9.99%

Annual Fee: $48

Minimum Credit Required: Bad credit

Regular APR: 10%

Annual Fee: $0

Minimum Credit Required: Bad

Intro APR: 0% for 21 billing cycles on both new purchases and balance transfers made in the first 60 days of account opening. Balance transfers are subject to a fee of 3%.

Regular APR: 15.99% - 25.99% Variable

Annual Fee: $0

Minimum Credit Required: Excellent

If you're in the market for your first credit card, you probably don't have much credit history, unless you've been able to build some as an authorized user on someone else's card. This means you may not get a low APR, as these cards are usually reserved for people with at least good credit. 

As a result, your aim should be to find a card with no annual fee that you can get approved for. Then, pay in full every month by the due date to avoid interest. Paying your bill on time will also help you build credit and get to a card with a lower APR.

The Annual Percentage Rate (APR) reflects the total yearly cost of a loan, by taking into account both the interest rate of the loan and any upfront fees charged by the lender. Comparing APRs is the most common way to compare loans.

A loan's APR is calculated under the assumption that the loan is kept for the complete term. If the loan is not kept for the complete term, and you are comparing two loans with the same APR but different fees, the loan with lower fees is better even though the interest rate is higher. As a result, if you are not planning to keep the loan for the complete term it might make more sense to compare loans based on their interest rates and fees instead of using the APR.

A 0% APR means that you pay no interest on new purchases, balance transfers or both for a certain period of time after you open the credit card account. The best 0% APR credit cards on the market currently give 15-21 months without interest. The average 0% APR intro period is about 12 months for cards offering 0% on purchases, according to WalletHub's Credit Card Landscape Report, and around 13 months for the average card with 0% on balance transfers.

A 0% APR does not save you from having to make monthly payments, nor does it completely remove interest from 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, the card's regular interest rate will apply to whatever balance remains.

The penalty is even worse with many retailers' 0% financing offers, which typically include a feature called deferred interest. 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.

Different Types of 0% APR Credit Card Offers

• 0% APR on purchases: Use your credit card to make purchases and pay them off during the promotional period, interest-free.
• 0% APR on balance transfers: You can reduce the cost of high-interest debt by transferring your balance to a 0% APR card.
• Deferred interest: Pay no interest or a reduced rate for a period of time, but if you don't repay your balance on schedule, the card's higher regular APR will be applied to your original purchase amount retroactively.

It's worth noting that some cards offer 0% APR on both purchases and balance transfers, but they may have different offer periods for each transaction. For example, a card could offer 0% APR for 21 months on balance transfers but only 12 months on purchases.

Who Can Qualify for a 0% APR Credit Card?

The best 0% APR credit cards require good or excellent credit for approval. Rarely do cards designed for people with bad credit offer 0% introductory APRs, but students with limited credit history may find attainable 0% credit card offers from time to time. People with fair credit may be able to qualify for a 0% store credit card, but they'll have to watch out for deferred interest.

You can check your credit score for free on WalletHub.

What Happens When the 0% APR Period Ends?

When the 0% APR period ends, the credit card's regular APR will kick in. That rate will apply to any unpaid balance remaining on the credit card as well as any new purchases made from that point on. The regular APR that applies when a 0% APR period expires tends to be very high, so it's best not to leave much of a balance for it to affect.

On the other hand, if you have a 0% intro APR with deferred interest (common among retail financing offers), it is vital to pay off the balance before the intro period ends. Paying one month's bill a day late or owing even $1 when the promotional period ends could trigger the deferred interest clause; high interest charges would retroactively apply to your entire original purchase amount.

Pros & Cons of 0% APR Credit Cards

Overall, 0% interest credit cards can be extremely helpful in certain situations. But if you regularly find yourself coming up short financially at the end of the month, a 0% period may land you in a deeper debt hole by the end of the no-interest window.

Popular 0% APR Credit Cards

For more options, check out our editors' complete picks for the best 0% APR credit cards on the market.

Finally, it's important to note that you may find 0% APRs on more than just credit cards. You might also 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.

A balance transfer APR is the interest rate an issuer charges on debts moved to a credit card from another loan or card. Many balance transfer offers include an introductory 0% APR that lasts for a specified number of months, usually 6 to 21 months. 

Once an introductory balance transfer APR expires, any remaining balance accrues interest at the card's regular balance transfer APR. This interest accrues daily, and it is calculated by multiplying the day's ending balance by the balance transfer APR and then dividing that number by 365.

Here are some of the best balance transfer credit cards:

The U.S. Bank Platinum offers an intro APR of 0% for 18 billing cycles on both balance transfers and purchases. After this period expires, its regular APR is 19.49% - 29.49% (V). There's also a balance transfer fee of 3% (min $5). The card has a $0 annual fee.

The Wells Fargo Reflect card's intro APR is 0% for 21 months from account opening on qualifying balance transfers and purchases and balance transfers. Then, the regular APR kicks in, which is 17.99% - 29.99% Variable. The balance transfer fee is 5% (min $5). This card has a $0 annual fee.

Th Citi Double Cash Card comes with a 0% intro balance transfer APR for 18 months. The regular APR is 18.99% - 28.99% (V). The card's balance transfer fee is 3% intro fee ($5 min) for each transfer in first 4 months, after that 5% ($5 min) for each transfer. 

With this card, you also get 2% cash back on every purchase. There is a $0 annual fee.

The BankAmericard credit card's intro APR is 0% for 21 billing cycles for any balance transfers made in the first 60 days. It also has a 0% APR on purchases for 21 billing cycles. Its regular APR is 15.99% - 25.99% Variable. There is also a balance transfer fee of 3%. The card comes with a $0 annual fee.

The balance transfer APR is one of several credit card APRs. A credit card will also include separate APRs for purchases and cash advances. In many cases, there's also a penalty APR for late payments.

What you should keep in mind before getting a balance transfer credit card:

In most cases, you will need a good credit score or better to qualify for one of the best balance transfer credit cards. Issuers will also review other information, such as your credit history, income, employment status, payment history, and debt level.

So, when comparing balance transfer credit cards, it's important to look at more than just the introductory balance transfer APR. Applicants should also consider the card's regular APR, along with its transfer fee and annual fee. It's important to consider how long it will take to repay the transferred debt, too.