What Is APR On Credit Cards?

APR stands for Annual Percentage Rate, which is decided on a yearly basis by the credit card company.

An APR (Annual Percentage Rate) is the rate by which you pay the credit card company for allowing you to borrow money upfront. In simple words, it is the cost you pay for borrowing money. This is charged on top of the money that you have borrowed each month, and of course, you have to pay the total amount next month.

Credit Card APR Explained

APR stands for Annual Percentage Rate, which is a combined figure of the interest rate AND any other fees liable on the loan. If there are no fees, the APR and interest rate remains the same. While comparing loans, the best way to do so is by comparing the APR rate because it includes all costs like broker fees, cost of procuring the loan etc.

The APR should always be greater than or equal to the nominal interest rate, except in the case of a specialized deal where a lender is offering a rebate on a portion of your interest expense.To get a great APR on a personal loan, lenders look for credit history. Your credit score plays a HUGE role when it comes to deciding APR, here’s how:

Credit Score Average Personal Loan APRs
Excellent (720 – 850) 10.3% – 12.5%
Good (680 – 719) 13.5% – 15.5%
Average (640 – 679) 17.8% – 19.9%
Poor (300 – 639) 28.5% – 32.0%

For people with a poor credit, there might not be many lenders willing to lend. And if there are, it isn’t necessary that borrowers get the most competitive rates.

How to calculate APR on Credit Card?

The APR helps in evaluating loan costs. You can calculate APR very easily, just bring along a pen and paper and follow the steps.

  1. Add total interest paid over the duration of the loan to any additional fees.
  2. Divide by the amount of the loan.
  3. Divide by the total number of days in the loan term.
  4. Multiply by 365 to find the annual rate.
  5. Multiply by 100 to convert annual rate into a percentage.

And voila! You have got yourself the APR. Find your current APR and current balance in your credit card statement, and then divide your APR rate by 365 (for the 365 days in the year) to find your daily periodic rate. Lastly, multiply your current balance by your daily periodic rate. For example, if your APR is 18%, your daily rate is .00049 (.18/365). This is the amount that will be applied to your new balance each day until it is paid off.

Credit Card APR Calculator

Multiply the DPR (Daily Periodic Rate) by the adjusted balance, which is the previous month’s balance less payments made. Then multiply that result by the number of days in the billing cycle. Assuming that Jon’s balance in May was $300 but he made payments totaling $200:

Monthly interest payment = 0.00041 × (300 – 200) × 30 = $1.23

The multiplication of regularly scheduled installments will lead suppliers to charge a base installment, which is generally an interest payment. It is absolutely important to pay off this figure. Inability to do so may prompt a cancellation of the card, lawful procedures, and a precarious drop in the FICO credit score of the holder.

Unless a credit card has a zero, or low, introductory, APR, interest paid on the balance is quite high. Credit card APRs are normally about 20%, which is generally high for any loan. A good rate of APRs is normally around 8-12%, however it is feasible for somebody with amazing credit to get even lower rates. This is because credit card debt is unsecured, meaning there is no collateral backing the loan.

If the borrower defaults, the bank can’t hold onto any resources and this danger is reflected in the high financing cost. Secured debt in comparison requires collateral, such as real estate. If the borrower defaults on the secured debt, the lender can foreclose and take possession of the real estate.

To get an even close estimate about the APR on credit cards, you can log in to an online calculator available on the internet, enter important details and figures and have the calculator give you an amount.

What is a good APR for a Credit Card?

A decent APR for a credit card is 14% and underneath. That is generally the normal APR among credit card offers for individuals with incredible credit. Also, an incredible APR for a credit card is 0%. The privilege 0% Mastercard could assist you with staying away from premium altogether on first-class buys or lessen the expense of existing debt.

In the event that you need to get a credit card with a low APR, it’s imperative to realize where to look and what to search for. There are two kinds of cards that carry low APRs: 0% APR cards and cards with low ongoing APR.

Zero percent APR cards normally offer no interest on purchases, balance transfers or both for a set period, ordinarily somewhere in the range of 6 and 21 months. However, when that advancement is finished, your APR could leap to a better than expected rate.

A credit card with a 0% APR introductory rate is a strong decision in the event that you have to pay down high interest credit card debt- and are certain you can pay the full balance before the advancement time frame closes and your rate spikes.

Then again, a credit card with a low continuous APR ordinarily won’t offer a 0% APR advancement. This might be a superior alternative in the event that you hope to carry a balance consistently.

In this table below, we have highlighted the lenders and typically what APR they have.

Lender/Lending Platform APR
Affirm 10.00% – 30.00% (0% APR offered at select retailers)
Alliant Credit Union 6.49% – 10.49% with AutoPay
American Express 6.90% – 19.98%
Avant 9.95% – 35.99%
Backed 2.90% – 15.99%
Best Egg 5.99% – 29.99%
Citibank 7.99% – 17.99% with discounts (rate may be higher)
Citizens Bank 6.80% – 20.91% with AutoPay
Discover Personal Loans 6.99% – 24.99%
E-LOAN 7.99% – 35.99%
Earnest 5.99% – 17.24%
FreedomPlus 7.99% – 29.99%
KeyBank 7.49% – 15.24% with AutoPay
LendingClu 6.95% – 35.89%
LendingPoint 9.99% – 35.99%
LightStream 4.99% – 19.99%
LoanStart 4.85% – 35.99%
Marcus 6.99% – 19.99%
Mariner Finance Up to 36.00%
Mr. Amazing Loans 19.9% – 29.9%
Navy Federal Credit Union 8.19% – 18.00%
OneMain Financial 18.00% – 35.99%
Payoff 5.99% – 24.99%
Peerform 5.99% – 29.99%
PersonalLoans.com 5.99% – 35.99%
PNC Bank 5.99% – 25.49% with AutoPay
Prosper 6.95% – 35.99%
Regions Bank 7.50% – 18.83% with AutoPay
RocketLoans 7.161% – 29.99%
Santander Bank 6.99% – 16.99% with ePay
Self Lender 10.58% – 14.77%
SoFi 5.99% – 18.83% with AutoPay
TD Bank 6.99% – 18.99% with AutoPay
Upgrade 7.99% – 35.97%
Upstart 7.46% – 35.99%
Wells Fargo 5.49% – 22.99%


What is a good APR for a Personal Loan?

A good APR lies in between 10% to 15%, and that happens when the borrower has a good credit score. But if your credit score isn’t too good, there are ways to improve it to get an excellent APR on your personal loan.

You can start by paying your credit bills on time, even one missed payment can affect your score. Set an alarm if you have to! If you set one alarm two days prior to the due date, you will have a reminder to pay your dues and if you don’t have the money, you will have time to arrange it. And one alarm should be on the due date so you pay immediately and never miss a payment.

You should decrease your credit card limit to 30%, this way you will only use whatever is available without spending more. And make sure you stick with this. Don’t go applying for a new credit card, because it will again affect your rating. Even taking these simple measures can bring up your credit rating in only a short span of 3-6 months.

Best Personal Loans for people with Bad Credit

Like it has been discussed, your interest rate on the loan and APR depends on the kind of credit rating you have, what your DTI is and several other factors. If you’re one of the people who have very poor credit, don’t feel disheartened. There are a couple of companies that give out loans to people with poor credit performance.

Here’s a table for you from where you can find the best personal loans for poor credit performers and also compare their rates.

Lender APR Loan Amount Terms Key Benefit SimpleScore
OneMain Financial 18%–35.99% Up to $20,000 Up to 60 months Same-day funding. 4.5/5
Peerform 5.99%–29.99% $4,000–$25,000 3 years Easy application process. 4/5
NetCredit 34.00%–155% Up to $10,000 6–60 months Low credit scores accepted. 3.2/5
Avant 9.95%–35.99% $2,000–$35,000 24–60 months Mobile application process available. 3.75/5
PersonalLoans.com 5.99%–35.99% Up to $35,000 90 days–72 months Short-term loans available if needed. 4.25/5
BadCreditLoans.com 5.99%–35.99% $500–$5,000 3–36 months Large affiliate network to fund your loan. 3.6/5

Note: Sample rates have been extracted online, courtesy of TheSimpleDollar.


To sum it all up, in very simple words, an interest rate is the cost of borrowing the loan and is charged on every installment that the borrower pays. Whereas an APR determines the cost of procuring the loan, broker fees and every other ‘hidden’ fees that may not be openly visible. An APR also includes the interest rate.

Both of these are heavily affected by the credit scores of the borrower; people with a good credit score will obviously get a competitive interest rate, thus a lower APR. And vice versa. But for people who don’t have a good credit rate can look for online lenders and credit unions who are willing to give loans to bad credit people. All you have to do is prove to them that you’re not a bad investment and that you will pay the loan promptly when the time comes. And make sure you do that too!

If getting a credit card isn’t an emergency, you can always take a couple of months to improve your credit score by paying on time and make sure you don’t miss any credit deadlines from now on. Even the slightest effort can make such a big difference.

And of course, the biggest tip for a good rate on credit cards is to shop around! Look around for rates and policies and lenders and make sure you scrutinize the market to get the best rate possible. Don’t just settle for anything you’re not satisfied with. Better yet, ask your friends and family to suggest a good company for a credit card; one that has easy policies and a relatively lower APR.

Sandra Johnson

Sandra Johnson

Sandra Johnson was a few years out of school and took a job as a life insurance agent in California, selling coverage door-to-door for Prudential. The experience taught her about the technical components of insurance and its benefits for individuals and society, as well as the misunderstandings people often have about insurance. She has over ten years’ experience in the insurance industry, having worked as both a Broker and Underwriter, assisting clients across a broad range of industries. At Insurance Noon, Sarah diligently gathers all the required information and curates up pieces to provide meaningful insurance solutions. Her personal value proposition is to demonstrate a genuine interest in always adding value for clients.Her determined approach to guiding clients has turned her into a platinum adviser to multiple insurers.

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