How to Secure the Best Credit Card Interest Rates

“`html

Understanding Credit Card APR and How to Get the Best Rates

At O1ne Mortgage, we prioritize consumer credit and finance education. This post aims to provide an objective view to help you make the best decisions regarding credit card APRs. For any mortgage service needs, call us at 213-732-3074.

Is There a Maximum Credit Card APR?

There is no federal law that limits the interest rates credit card companies can charge in general. However, for active-duty military service members and their covered dependents, the Military Lending Act caps interest rates at 36%. Additionally, the Servicemembers Civil Relief Act allows active-duty service members to request a credit card interest limit of 6% for balances incurred before active duty.

Some states have usury laws that limit the amount of interest that can be charged on different kinds of loans. These laws typically apply in the state where the credit card issuer is based, not necessarily where you live. Credit card companies often base their operations in states with favorable or nonexistent usury laws.

What’s a Good Interest Rate on a Credit Card?

A good interest rate on a credit card is one that falls below the national average. According to the Federal Reserve, the average APR on credit cards was 20.92% in Q1 2023. Credit card APRs often rise and fall as the Federal Reserve adjusts the federal funds rate, which can trigger changes in the prime rate—the rate on which most credit card interest is based.

How to Check Your Interest Rates

To find out the interest rate you are paying or being offered on a new card, check your credit card statement or new card offer. The Schumer box on your statement will show APRs and other charges associated with your card, including your purchase rate and the rate you pay on balances carried over month to month.

Other Factors That Affect Your Rate

Your credit card interest rate may depend on various factors related to your card and your credit profile:

• Credit score: Cardholders with better credit can qualify for cards with lower APRs.
• Promotional rates: Some cards offer special limited-time promotional interest rates on balance transfers or purchases.
• Penalty APRs: Late payments can trigger penalty interest rates that are much higher than your card’s usual APR.
• Cash advance rate: The APR on cash advances may be higher than your regular purchase rate.
• Secured vs. unsecured cards: Secured credit cards, which require an opening deposit, typically have higher interest rates than unsecured cards.

How to Find the Best Interest Rate on a Credit Card

If you’re in the market for a new credit card, shopping around can help you secure the best APR. Follow these steps to get the information you need:

1. Check Your Credit

Good credit can help you get the best interest rate on a new card. Obtain copies of your credit reports from Experian, TransUnion, and Equifax by visiting AnnualCreditReport.com. You can also check your FICO® Score for free from Experian.

2. Compare Cards

Using an online search tool can connect you with multiple credit card offers based on your credit profile. Compare the options to find the most competitive rate.

3. Read the Fine Print

Before signing a card agreement, read the Schumer box and the fine print to understand how your interest rate is calculated, any promotional interest rates, penalty rates for late payments, and other details that may affect your APR.

If credit issues are preventing you from getting a competitive APR, consider taking six months to a year to improve your credit. Making on-time payments, reducing your credit utilization, and avoiding multiple new accounts can help lift your credit score over time.

The Bottom Line

Rising credit card interest rates can be frustrating. To manage the cost of carrying a balance, consider paying down your credit card debt or looking into a debt consolidation loan. Although personal loan interest rates are also high, they are typically lower than credit card rates.

If you’re looking for a new card with a more favorable APR or a personal loan to consolidate your debt, start by checking your credit report and credit score. For any mortgage service needs, call O1ne Mortgage at 213-732-3074. We’re here to help you make the best financial decisions.

“`