What is a good APR for your first credit card
Quick insights
- A “good” APR is relative to your credit history and the type of credit card that best meets your need.
- Some credit cards may offer a 0% APR for an introductory promotional period.
- If you want to qualify for a lower APR, it might be a good choice to work on establishing your credit history and increasing your credit score.
APR—the annual percentage rate—is the cost of borrowing money on a yearly basis expressed as a percentage rate. So, what is a good APR for a credit card? And what is a good APR for a first credit card? These are key questions to consider for responsible borrowers. Here’s what you need to know as you evaluate a credit card’s APR.
APR for starter credit cards
If you’re learning about how to get your first credit card, you might be curious about what counts as a good APR. Ultimately, APR is relative. The rate you get will largely depend on your credit history, as well as the type of credit card you want.
Nevertheless, it’s still helpful to know how the rates you qualify for compare to others. According to data from the Federal Reserve—the central banking system of the U.S.—the average APR on all credit card accounts assessed interest in February 2024 was 22.63%. So, anything below that would be considered a good APR for a credit card. Unfortunately, this data is not available for the average APR for a first credit card.
The best possible APR is 0%, but this rate is typically only available when a credit card has an introductory promotional period, which could be for a period of 12 months or more. In this case, your APR will then return to the higher rate after that introductory period is over. If you are approved for a credit card with an introductory rate, be sure to carefully read the terms and conditions, which will outline the APR you'll receive when your promotional period is done.
If you haven’t yet established a good credit history, it may be challenging to get a lower APR. While APR is an important factor to consider as you select a card, it’s preferable to pay off your balance in full every month to help avoid accruing interest.
In addition to your credit history, the type of credit card can impact the rate. For example, if you’re a student or you’re completely new to credit, you may want to look into how to apply for a student credit card. While Chase does not offer a student credit card, Chase Freedom Rise℠ might be a good choice if you’re looking for your first credit card.
However, if you’re interested in a rewards credit card, you could find that the APRs for these cards may exceed the national average. But the perks might be worth it for you if you’re able to qualify for one, especially if you pay off your balance every month.
Depending on your needs, it may also helpful to look at the card’s penalty APR—the interest rate increase that may occur in the event that you miss a payment—and cash advance APR.
How your credit history may affect your APR
If you have a higher credit score and a history of consistently paying back debts on time, you’ll tend to receive a lower APR. This is because credit card issuers want to minimize risk. They see your proven history with credit as a predictor of future behavior and assume that you’re more likely to manage credit responsibly since you have done so in the past.
If your credit score is lower, your APR may be at the higher end of the credit card’s range for APR. The good news is that if you improve your credit habits over time, you may qualify for lower APRs in the future.
Regardless of credit history, one factor that impacts everyone’s APR is the prime rate. The prime rate is tied to the federal funds rate set by the Federal Reserve, and the issuer uses this as a basis for setting their variable APRs.
How to find your APR
When you’re comparing credit cards, you can usually find the APR on the credit card’s website in the terms and conditions. The issuer may have a set APR for all cardmembers, or you may find an APR range within which they assign rates based on creditworthiness.
If you already have a credit card, you can check your issuer’s app or webpage, your most recent statement or the cardmember agreement you received to find your APR. It’s a good idea to check it periodically and see if the rate has changed. This can happen if you miss a payment or, in the case of a variable APR, if the prime rate changes.
It’s helpful to understand how the APR translates to credit card interest calculations. These calculations may appear on your statement when you carry a balance. If you want to know more about how these calculations are made, this guide on how to find your APR and calculate your interest charge may help.
How to qualify for a good APR
To secure a good APR, it’s best to make yourself as attractive as possible to banks. You want to demonstrate that you’re a responsible borrower who is unlikely to pose a risk of nonpayment. Here are some of the ways that could make you a more attractive applicant:
- Continuously make on-time payments
- Avoid maxing out your credit card
- Pay off your balance in full every month
- Be strategic about new credit inquiries
Too many hard inquiries on your credit may affect your credit score, so make sure to research credit card rewards and perks, fees, APR and your financial needs before applying for a new credit card.
If you’ve already have a credit card and want to lower your APR, you can always reach out to the issuer and ask them to reduce your APR. There’s no guarantee they’ll agree. You’re more likely to have success if you have a good credit history and have made on-time payments.
In summary
As a general rule, the better your credit, the lower the APR you can qualify for. The type of credit card you apply for can also impact the APR. Regardless of the credit card type or interest rate, it’s a good idea to avoid carrying a balance so that you can avoid accruing interest on purchases. If you want to qualify for a better APR, your best bet may be to establish a credit history that shows lenders you know how to use your credit card responsibly.
