What is a High Credit Card APR?
- What is APR?
- What is a high APR?
- How to avoid high APRs
- How to get a lower APR
A high credit card APR is a high interest rate that is charged on borrowed money. The average credit card APR is around 15%.
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What is APR?
APR stands for annual percentage rate. It’s the fee you’re charged for borrowing money on your credit card, and it’s expressed as a yearly rate. Your APR can be variable or fixed, which means it can change over time or stay the same. A high APR means you’ll have to pay more in interest charges if you carry a balance on your card from month to month.
Annual Percentage Rate
The Annual Percentage Rate (APR) is the cost of credit expressed as a yearly rate. The APR for purchases and balance transfers is variable and will be based on the Prime Rate plus a margin. The APR for cash advances is variable and will be based either on the Prime Rate or a different rate, which may be higher.
The cost of borrowing money
The cost of borrowing money is the price you pay for using someone else’s money. The price is usually expressed as a percentage of the amount borrowed, called the interest rate. The interest rate is usually quoted as an annual percentage rate (APR).
For example, if you borrow $100 at an APR of 10%, you will owe $110 at the end of one year. If you borrow $1,000 at an APR of 10%, you will owe $1,100 at the end of one year.
The APR is different from the interest rate because it takes into account not only the interest rate but also other fees charged by the lender, such as points and origination fees.
The APR is intended to give borrowers a true cost comparison between different lenders. For example, if Lender A charges an interest rate of 10% and Lender B charges an interest rate of 20%, but Lender A has no other fees and Lender B has origination and points fees totaling 2%, then the APR for Lender A would be 10% and the APR for Lender B would be 22%. In this case, despite having a higher interest rate, Lender A would be cheaper because its total cost would be lower.
When you’re shopping for a loan, always compare APRs rather than just interest rates to make sure you’re getting the best deal.
What is a high APR?
A high credit card APR is a credit card with an APR that is higher than the average APR for all credit cards. The average APR for all credit cards is about 15%. So, a high credit card APR would be an APR that is greater than 15%.
APR of 20% or more
An APR, or annual percentage rate, is the interest you’ll pay on a loan – including credit card debt – in a year. So if you have a card with a 20% APR and you carry a balance of $1,000 from one month to the next, you’ll owe $200 in interest for that year unless you pay off your balance in full.
APRs can vary widely – from 0% for promotional rates on balance transfers to more than 30% for some cash advance and penalty APRs. Your APR is determined by many factors, including your credit score and the type of card you have.
If you have good credit, you’re likely to get an APR in the single digits. If your credit is fair or poor, you may be stuck with an APR of 20% or more.
The average APR
The average APR, or annual percentage rate, on a credit card is around 15%. That means if you have a balance of $1,000 on your card, you’ll owe the credit card company $150 in interest each year.
Some cards have much higher APRs, sometimes as high as 30%. That means if you carry a balance of $1,000 on one of these cards, you’ll owe the credit card company $300 in interest each year.
Generally speaking, the higher your APR is, the more expensive it will be to carry a balance on your credit card. If you have a high APR and are carrying a balance, you may want to consider transferring your balances to a new card with a lower APR.
How to avoid high APRs
Many people don’t realize that their credit card has an APR, or annual percentage rate. This is the amount of interest you’ll pay on your balance if you don’t pay it off in full each month. If you carry a balance from month to month, you’re essentially giving the credit card company an interest-free loan. To avoid paying interest, you should always pay your balance in full each month.
Shop around for a lower APR
There are a few things you can do to try to avoid getting stuck with a high APR on your credit card:
1. Shop around for a lower APR: One way to avoid having to pay a high APR is to simply shop around for a credit card that offers a lower interest rate. This is especially important if you know you’ll be carrying a balance on your card from month to month.
2. Negotiate with your credit card company: If you already have a credit card with a high APR, you can try to negotiate with your credit card company to get it lowered. This is more likely to be successful if you have good credit and have been a customer of the company for awhile.
3. Use balance transfer offers: Another way to avoid paying interest on your credit card balance is to take advantage of 0% balance transfer offers that are occasionally available from some issuers. With this type of offer, you can transfer your balance to another card with a 0% APR for a period of time, typically 12 months or more. This can give you some breathing room to pay down your debt without having to worry about accruing interest charges.
4. Pay your balance in full each month: The best way to avoid paying interest on your credit card balance is to simply pay it off in full each month. This can be difficult if you’re carrying a lot of debt, but even paying off part of your balance can help reduce the amount of interest you’re paying.
Pay off your balance in full each month
One way to avoid paying interest on your credit card balance is to pay off the entire balance each month. If you carry a balance from month to month, you will be charged interest on that balance. The APR on your credit card is the rate at which you will be charged interest.
Some credit cards offer a grace period, which is a period of time during which you will not be charged interest on your balance if you pay it off in full each month. However, if you do not pay off your balance in full during the grace period, you will be charged interest from the date of purchase.
It’s important to note that some credit cards do not offer a grace period and will instead charge interest on purchases from the date of purchase. If your credit card has no grace period, it’s important to pay off your balance in full each month to avoid paying interest.
Use a balance transfer credit card
If you have a high APR on your credit card, you may be able to avoid paying interest on your balance by using a balance transfer credit card. A balance transfer credit card is a credit card that offers a 0% APR on balance transfers for a period of time (usually 12-18 months). This can help you save money on interest, so you can pay off your debt faster.
To get a balance transfer credit card, you will need to have good or excellent credit. You can check your credit score for free with Credit Sesame to see if you qualify. If you do qualify, make sure to shop around for the best deal. Different balance transfer credit cards have different terms and conditions, so it’s important to compare your options before you apply.
How to get a lower APR
Your credit card APR is the rate at which you’ll be charged interest on your outstanding balance. A high APR means you’ll have to pay more in interest, which can be a burden if you carry a balance on your card. There are a few things you can do to try to get a lower APR, including paying your bill on time, using your credit responsibly, and shopping around for a card with a lower APR.
Negotiate with your credit card company
It’s important to remember that credit card companies are businesses, and like all businesses, they want your business. If you have been a good customer and have a history of timely payments, then you have some bargaining power.
Here are a few tips to get you started:
1. Know your current APR: Before you can negotiate a lower APR, you need to know what your starting point is. Check your most recent credit card statement or give your credit card issuer a call to find out what your current APR is.
2. Be prepared to explain why you deserve a lower APR: Whether it’s because you’ve been a loyal customer or because you’ve recently faced financial hardship, be prepared to explain why you deserve a lower APR.
3. Have an alternative in mind: If your credit card issuer is unwilling to lower your APR, ask if there are any other options available, such as waiving late fees or increasing your credit limit.
4. Be willing to walk away: If your credit card issuer is unwilling to meet your demands, be prepared to take your business elsewhere. There are plenty of other credit card issuers who may be more than happy to offer you a lower APR.
Use a rewards credit card
If your interest rate is high, using a rewards credit card could help you lower it. Rewards credit cards typically have APR’s that are lower than the average credit card. More importantly, many rewards credit cards offer a 0% APR introductory rate for a certain period of time. This could help you immensely if you plan on making a large purchase or if you’re trying to pay off debt. Just make sure that you don’t carry a balance on your rewards card after the introductory period expires, or you could end up paying more in interest than you would have with your high APR card.
Get a 0% APR credit card
A 0% APR credit card could help you save on interest if you’re carrying debt from month to month. When you have a 0% APR card, you won’t be charged interest on your balance for a promotional period, which could be anywhere from 12 to 21 months.
However, you will likely have to pay fees, including an annual fee, balance transfer fee and possibly a foreign transaction fee. You’ll also need good to excellent credit to qualify for a 0% APR card.
If you carry a balance after the promotional period ends, you’ll start accruing interest at the card’s ongoing APR, which could be as high as 20% or more. So it’s important to come up with a plan to pay off your debt before the promotional period ends.