The Ultimate Guide to Credit Cards
Tuesday, September 22, 2020

What is APR on a Credit Card? 9 Best Low-Interest & 0% APR Cards

What Is Apr On A Credit Card

credit card advice

Linsey Knerl
By: Linsey Knerl
Updated: October 30, 2019
Advertiser Disclosure

If you’ve been considering applying for a new credit card, you’ve likely heard a lot about the term “APR.” So, exactly, what is APR on a credit card? This term is perhaps the most critical factor in deciding which card to get, and it can be used to put you in a better overall financial situation – if handled correctly.

Here are the facts about APR, why it matters, and what you can do to make it work for you.

Low APR | 0% Intro APR | 0% Balance Transfer APR

APR Stands for “Annual Percentage Rate”

One of the most important features in deciding which credit card to apply for is the APR. This term refers to the “annual percentage rate” you’ll pay in interest for anything you purchase with that card. When calculating your actual interest payments, your APR will be divided by the days in the year to determine your daily periodic rate, since credit card interest compounds daily.

Each issuer may have its own specific method of determining your exact interest fees, which should be laid out in your cardholder agreement. In general, most cards offer an interest-fee grace period after each purchase before the rate goes into effect. Once the grace period is over (commonly between 20 and 30 days), the total balance of your card’s purchases is subject to this additional APR fee.

APRs are Variable, Meaning They Change Often

It is very important to keep an eye on your accounts over time, as the interest rate (or APR) can and will change. There are many reasons why a percentage rate will go up. Some of these may not be your fault, such as when the FED (Federal Reserve) raises prime rates. This is a standard rate for all lending institutions, and your card may have no choice but to pass that rate change on to you. When this happens, your card will send you a notification, usually 45 days or more in advance, to warn you of the change.

You may also see your APR go up if a special low-rate offer has expired. Many balance transfer offers, for example, start you at a low rate and then bump you back up to your normal rate after the offer is over. Anything not paid off before the promotional offer expires will be charged the higher APR. Your credit card company does not have to notify you in advance of this promotion expiration, so it’s up to you to keep track and pay your balances before they become more expensive.

Screenshot of APR Types

Consider the types of APR when selecting a new credit card. Photo credits: bettermoneyhabits.com

Other actions can negatively affect your Annual Percentage Rate. They include making late payments to your account. If you go more than 60 days without paying your minimum due, your card can impose what is called a “Penalty APR.” This may be as high as 29.99%! It’s always in your best interest to make every attempt at paying your minimum and always communicate with your card company if you find it difficult to do so.

Additionally, cards are allowed to raise rates after 12 months of your being a customer. While this doesn’t happen as often, it is perfectly legal. Your card issuer will need to notify you in advance of the change, however, and allow you to pay your balance before the change kicks in.

How Your Credit Score Affects Your APR

Another way that APRs often change is directly related to your spending and payment habits. As a result, a credit score is one of the most common influencing factors in card interest rates. The banks see it as the most important piece of information they can obtain to decide your ability to pay back charges.

A significant positive change in your score can open doors to rates as low as 0% for promotional offers, and 13.99% after. A negative credit score will likely make it difficult to get such great rates. Expect to pay the high end in this situation; 22% or more is not unheard of for less-than-stellar credit.

If you’ve been taking good care of your finances, and have earned a good credit report, you are likely eligible for one of these three top low-APR offers. Use them to pay less interest on your purchases!

Applied Bank® Secured Visa® Gold Preferred® Credit Card Review

at the issuer'ssecure website

LOW APR RATING

★★★★★
4.8

OVERALL RATING

4.0/5.0
  • Better than Prepaid...Go with a Secured Card! Load One Time - Keep On Using
  • Absolutely No Credit Check or Minimum Credit Score Required
  • Automatic Reporting to All Three National Credit Bureaus
  • 9.99% Low Fixed APR - Your Rate Won’t Go Up Even if You Are Late
  • Activate Today with a $200 Minimum Deposit - Maximum $1,000. * Increase Your Credit Limit up to $5,000 by Adding Additional Deposits Anytime
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
N/A
N/A
9.99%
$48
Poor/Fair/Limited/Damaged
Business Advantage Travel Rewards World Mastercard® Review

at the issuer'ssecure website

LOW APR RATING

★★★★★
4.7

OVERALL RATING

4.5/5.0
  • Earn unlimited 1.5 points for every $1 you spend on all purchases, everywhere, every time – no matter how much you spend
  • Earn 3 points per every dollar spent when you book your travel (car, hotel, airline) through the Bank of America® Travel Center
  • Earn 30,000 bonus points when you make at least $3,000 in net purchases within 90 days of your account opening which can be redeemed for a $300 statement credit towards travel purchases
  • Get 75% more points on the base earn of every purchase you make when you’re a Preferred Rewards for Business Platinum Honors tier member. That means you'll earn 2.62 points on all purchases and 4.12 points for every $1 you spend at the Bank of America® Travel Center.
  • 0% introductory APR on purchases for 9 billing cycles from account opening
  • $0 annual fee
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
0% for 9 billing cycles
N/A
12.24% - 22.24%
$0
Good
Business Advantage Cash Rewards Credit Card Review

at the issuer'ssecure website

LOW APR RATING

★★★★★
4.7

OVERALL RATING

4.6/5.0
  • Earn 3% cash back on your choice of one of the following six categories: gas stations (default), office supply stores, travel, TV/telecom & wireless, computer services, or business consulting services
  • Earn 2% cash back on dining, earn unlimited 1% cash back on all other purchases
  • Get a $300 statement credit when you make at least $3,000 in net purchases within 90 days of your account opening
  • Get 75% more cash back on every purchase when you're a Preferred Rewards for Business Platinum Honors tier member. That means you'll earn 5.25% on your selected choice category, 3.5% on dining, and unlimited 1.75% cash back on all other purchases.
  • $0 annual fee
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
0% for 9 months
N/A
12.24% to 22.24%
$0
Good

+See More Low APR Offers

If You Have Good Credit, You May Qualify for a 0% Intro APR

One of the perks of having good credit is that you will have some amazing opportunities to use zero-interest promotional offers. New cards are always giving responsible consumers the chance to apply for cards with 0% APR on purchases, balance transfers, or both! These are limited-time offers, meaning they don’t last forever. (Remember that you are responsible for tracking their end dates, as well.)

Expect to see these excellent offers last between 12 and 18 months for new cardholders.
The following cards are top-rated by consumers for their 0% APR offers. They could be just what you need to pay off high-balance cards or invest in your home, auto, or other important expense.

0% INTRO APR RATING

★★★★★
4.9

OVERALL RATING

5.0/5.0
  • Earn a $200 Bonus after you spend $500 on purchases in your first 3 months from account opening.
  • Earn 5% cash back on grocery store purchases (not including Target® or Walmart® purchases) on up to $12,000 spent in the first year.
  • Earn unlimited 1.5% cash back on all other purchases.
  • Earn 5% on travel purchased through Chase, 3% on dining at restaurants and drugstores, and 1.5% on all other purchases.
  • No annual fee.
  • 0% Intro APR for 15 months from account opening on purchases, then a variable APR of 14.99 - 23.74%.
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
0% Intro APR on Purchases 15 months
N/A
14.99% - 23.74% Variable
$0
Good/Excellent
Wells Fargo Platinum Card Review

at the issuer'ssecure website

0% INTRO APR RATING

★★★★★
4.9

OVERALL RATING

4.6/5.0
  • Introductory 0% APR for 18 months from account opening on purchases and balance transfers (3% balance transfer fee applies)
  • Account protection features such as Zero Liability protection for promptly reported unauthorized transactions, alerts, and cell phone protection
  • My Money Map – tools to help you manage spending and create a budget with ease
  • Access to your FICO® Credit Score with Wells Fargo Online®
  • $0 annual fee
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
0% for 18 months
0% for 18 months
16.49% - 24.49%
$0
Good

0% INTRO APR RATING

★★★★★
4.9

OVERALL RATING

4.8/5.0
  • One-time $150 cash bonus after you spend $500 on purchases within 3 months from account opening
  • Earn unlimited 1.5% cash back on every purchase, every day
  • No rotating categories or sign-ups needed to earn cash rewards; plus, cash back won't expire for the life of the account and there's no limit to how much you can earn
  • 0% intro APR on purchases for 15 months; 15.49%-25.49% variable APR after that
  • Pay no annual fee or foreign transaction fees
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
0% for 15 months
N/A
15.49% - 25.49% (Variable)
$0
Excellent, Good

+See More 0% Intro APR Offers

If You Carry Debt, Utilize 0% APR Balance Transfer Offers

A great intro offer, like the 0% APR many cards offer, is perfect for transferring the balances from high-rate cards. If you have found that your existing card issuer won’t work with you to bring down your APR, you can move some or all of that balance to your new card and watch the interest rate fall to nothing!

You can use an online calculator to see how much you’ll save by switching to a 0% interest rate over time. It can mean savings of up to hundreds of dollars. Just be sure to pay off that balance before the promotional rate expires to get the best value.

It’s also important to read the terms for any 0% APR offer. Most all will charge a balance transfer fee of 3-5% of the total amount transferred. That fee will be charged immediately upon transfer and will be added to your total due. Compare card offers to see if you can get the lowest transfer fee for additional savings.

The following cards are top-rated by consumers for their 0% APR offers. Use them to pay off high-balance cards and get rid of debt at a much lower rate.

0% BALANCE TRANSFER RATING

★★★★★
4.9

OVERALL RATING

4.7/5.0
  • No Late Fees, No Penalty Rate, and No Annual Fee... Ever
  • 0% Intro APR on balance transfers for 21 months from date of first transfer. All transfers must be completed in first 4 months. After that, the variable APR will be 14.74% - 24.74%, based on your creditworthiness.
  • 0% Intro APR on purchases for 12 months from date of account opening. After that, the variable APR will be 14.74% - 24.74%, based on your creditworthiness.
  • If you transfer a balance with this offer, after your 0% Intro purchase APR expires, both new purchases and unpaid purchase balances will automatically accrue interest until all balances, including your transferred balances, are paid in full
  • There is a balance transfer fee of either $5 or 5% of the amount of each transfer, whichever is greater.
  • The standard variable APR for Citi Flex Plan is 14.74% - 24.74%, based on your creditworthiness. Citi Flex Plan offers are made available at Citi's discretion.
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
0% for 12 months
0% for 21 months
14.74% - 24.74% (Variable)
$0
Excellent/Good

0% BALANCE TRANSFER RATING

★★★★★
4.9

OVERALL RATING

4.6/5.0
  • 0% Intro APR on balance transfers for 21 months from date of first transfer. After that, the variable APR will be 13.74% - 23.74%, based on your creditworthiness. All transfers must be completed in first 4 months.
  • 0% Intro APR on purchases for 12 months from date of account opening. After that, the variable APR will be 13.74% - 23.74%, based on your creditworthiness.
  • If you transfer a balance with this offer, after your 0% Intro purchase APR expires, both new purchases and unpaid purchase balances will automatically accrue interest until all balances, including your transferred balance, are paid in full.
  • There is a balance transfer fee of either $5 or 5% of the amount of each transfer, whichever is greater
  • Get free access to your FICO® score online.
  • With Citi Entertainment℠, get special access to purchase tickets to thousands of events, including concerts, sporting events, dining experiences and more.
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
0% for 12 months
0% for 21 months
13.74% - 23.74% (Variable)
$0
Excellent/Good

0% BALANCE TRANSFER RATING

★★★★★
4.8

OVERALL RATING

4.8/5.0
  • Earn cash back twice. Earn 2% on every purchase with unlimited 1% cash back when you buy, plus an additional 1% as you pay for those purchases.
  • To earn cash back, pay at least the minimum due on time.
  • Balance Transfer Offer: 0% intro APR on Balance Transfers for 18 months. After that, the variable APR will be 13.99% - 23.99%, based on your creditworthiness.
  • Balance Transfers do not earn cash back.
  • If you transfer a balance, interest will be charged on your purchases unless you pay your entire balance (including balance transfers) by the due date each month.
  • There is a balance transfer fee of either $5 or 3% of the amount of each transfer, whichever is greater.
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
N/A
0% for 18 months
13.99% - 23.99% (variable)
$0
Excellent/Good

+See More 0% Balance Transfer Offers

Pay Your Balance Each Month to Avoid Paying Interest

No matter how low your APR is, it’s important to pay your balance each and every month. If you have a low introductory offer that includes a balance transfer, additional purchases may not be subject to that low rate. That’s why you must pay any new balance in full to avoid paying the higher interest rate. (Check your statement monthly to see each interest rate category and work to always pay off the amounts subject to interest first.) Making timely monthly payments is also one of the most important factors in determining your credit score.

It is also common for people to allow their intro offer to expire before they have paid off their card. Use your card statement to determine how many payments you have left before the 0% offer is over, and pay extra – if needed – to beat the clock. The goal is to use the intro offer as a tool to paying off debt, without interest. Once that is paid, continue paying your full balance monthly, and never pay an APR again!

 

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