When it comes to credit cards, one of the major factors that we always consider when applying is the credit card interest rate. The interest rate plays a huge role in applying for and owning a credit card, which is considered an additional expense.
Many credit cards have very high-interest rates, and some have lower interest rates but fewer features and perks. So, how do you get the perfect balance between having a credit card with good features and a good interest rate?
This article will teach you how to get the best deal on credit card interest rates.
What is a Good Credit Card Interest Rate?
Credit card interest rate or APR is the fee that you will be paying for borrowing money from a credit card.
If you have a balance, your APR or interest rate will be calculated based on that balance.
A good credit card APR for purchases is usually above 20% which is the national average. If it falls below the national average, you might have a very good credit card APR.
A credit card with slightly just above 20% is already considered a good credit card.
How Credit Affects Your APR
When calculating your APR, your credit card issuer will always consider your credit score. This is why you need to have a good credit score when you apply for a credit card.
A good or excellent credit score will result in a lower credit card APR while having a bad credit score results in higher credit card interest rates.
Your credit score reflects how you’re able to pay off your balance in a responsible way and having a less-than-desirable score makes you a less-than-desirable credit cardholder.
What Happens When You Have a Credit Card with Low APR?
Most of the time, credit cards with low APR do not have a lot of features and perks in them.
The lack of features is compensated for by the low-interest rate, which can help you save more money.
A credit card with a low APR is a great way for you to use your card only in emergencies without having to deal with a huge bill at the end of the month.
If you’re a person who rarely uses a credit card or just wants to own a credit card for emergency purposes, you might be okay with a credit card with low APR but with fewer features.
What Happens When You Have a Credit Card with a High APR?
Most rewards credit cards and store credit cards often have high APRs but are loaded with benefits and perks.
These types of credit cards are not meant to carry a lot of balance, which can trigger the interest rate, and you may end up paying more than you expect.
Many people often get rewards credit cards and store credit cards since they offset the high APR with the perks and features. If you’re able to pay off your balance in full, a credit card with a high APR that has a lot of perks should be your go-to kind of credit card.
How to Qualify for a Good Credit Card APR
Finding the perfect balance between a good credit card APR and the features that you want is always important.
When you’re able to find that balance, you can enjoy the benefits of owning a rewarding credit card without having to worry about paying tons of interest rates.
Here are some tips on how you can qualify for a credit card and get a good credit card APR.
Develop Good Credit Habits
One of the best ways for you to qualify for a good credit card APR is to develop good credit habits even before you apply for a credit card.
Before you apply, pay off as many outstanding balances as possible. Prioritize all of your existing debts and pay them off.
Once you have cleared everything, wait for your credit score to stabilize first before you apply for a credit card. You should be able to receive a better deal now that you have a better score.
Always Pay on Time
Another good credit habit that you need to develop is to pay on time all the time.
If you find it difficult to pay off your statement in full, you can always opt to pay your credit card’s minimum due for the time being.
Add a small amount to your minimum due payment to lessen your burden. Remember that your credit card payment history makes up around 35% of your credit score so be sure to pay on time.
Keep Your Credit Utilization Ratio Healthy
The credit utilization ratio is calculated based on the amount of credit you’ve used against the amount of credit that you were given.
Having a high credit utilization ratio can be detrimental to your credit score. Keep your balances low as it helps keep your credit utilization ratio healthy and allows you to pay off your balance in full.
Make your life easier by keeping your credit utilization ratio healthy at all times.
Contact Your Credit Card Issuer
If you truly want to qualify for a good credit card APR, you can always call your credit card company and negotiate the terms with them.
There is nothing wrong with being honest with your credit card issuer about your need to have a lower interest rate. You can explain to them that it can help you spend less on interest rates and more on using the credit card.
If you already have a good relationship with your credit card company, make this a leverage to grant your request.
Conclusion
Getting better credit card interest rates requires a ton of work even before you apply for a credit card. Always pay attention to your credit score and how you deal with your finances. You should focus on creating good credit habits so that you will always get the best deal when it comes to credit card interest rates.
