Q: What is considered to be a “good” APR on a credit card these days?
A: When it comes to standard (non-promotional) interest rates, unfortunately what’s considered to be “good” is a far cry from the low APR cards which were available before the 2008 financial meltdown.
Before that, I remember my American Express Simply Cash card had a standard purchase APR of the prime rate + 0%. Obviously the prime rate fluctuates, but over the past 15 years the highest it has ever been was 9.5% (in the year 2000).
Unfortunately, you no longer will find credit cards offering prime + 0 as a regular (non-introductory) interest rate, even though some cards offer 0% intro rates on purchases for a year or longer. And, the prime rate may be going up at some point this year if one believes the prognosticators who follow Federal Reserve policy. So, what’s the lowest this year? As you know most cards have different tiers, which are based on your creditworthiness. Almost all the major banks set the lowest end of the APR range at somewhere between 11% and 16% for prime cards. So a good credit card interest rate will be toward the lower end of that range.
If you have a rate of 14% to 17% that is more or less average. Anything above that is starting to get usurious if you have good credit. Sub-prime cards run as much as 30%, which is really predatory lending imho.
How can you do even better in 2017?
Even if you fall within that 10-13% range, you might could be doing better if your credit score is top rate. Obviously you already know credit card debt is a bad thing, so I won’t give you that whole spiel. Instead, let’s just talk about the best solution for managing the debt while you pay it off.
The first thing you need to do is move your balance. Even if you call and threaten to cancel your card, it’s highly unlikely that they will lower your rate significantly. The only way to lock in a good interest rate is to transfer your balance to a promotional offer with another card.
The best introductory rate promotions – those which offer 0% interest – are reserved only for new applicants,unfortunately. It’s permissible to have another card with the bank, but you can’t have the same card and expect to get an advertised promo rate on purchases and/or balance transfers.
Also, you need to know that banks don’t allow you to transfer balances to another card they might issue. For example, if you currently have a balance on a Chase Freedom with a high rate, you can’t apply for the Chase Chase Slate 0% offer and move the balance to it.
So when shopping for a 0% offer, you must find a bank or issuer that is different than the one for your current credit card. For example, if you do have a balance on your Chase card, then apply for the Discover 0% offer and move your balance over there. Banks try to shift market share from each other all the time with these 0% balance transfer offers and they present an excellent opportunity for consumers to aggressively pay down the principal on their balances while enjoying an interest rate holiday of sorts. If you’ve racked up a lot of holiday debt then 0% transfer offers are definitely something to consider.
Go here to see the best 0% credit card offers currently available (some give 0% for up to 18 months). Many even give you the 0% on both purchases and balance transfers.