Is a 24.99% APR Good or Bad? (2024)

FAQs

Is 24.99% APR good? ›

Yes, a 24% APR is high for a credit card. While many credit cards offer a range of interest rates, you'll qualify for lower rates with a higher credit score. Improving your credit score is a simple path to getting lower rates on your credit card.

This is one example of “bad APR,” as carrying a balance at a 25% APR can easily create a cycle of consumer debt if things go wrong and leave the cardholder worse off than when they started.

If you have a credit card with a 24% APR, it is the rate you're charged over 12 months—this means that each month comes out to be 2% (24% divided by 12 months). This shows how much you have to pay to borrow money monthly.

Key takeaways. A good credit card APR is a rate that's at or below the national average, which currently sits above 20 percent. While there are credit cards with APRs below 10 percent, they are most often found at credit unions or small local banks.

APR is the price you pay for a loan. It typically includes interest rates and fees. APR can sometimes be the same as a loan's interest rate, like in the case of most credit cards. APR may be fixed or variable, meaning the rate may stay the same or it might change with market factors.

There's no set definition of what a good credit card APR is. It depends on factors such as your credit history, income, and the specific card product. As of August 2023, the average credit card interest rate is around 24% in the United States, and an APR of 20% would be on the lower end.

Your APR doesn't matter if you pay off your balance each month, thanks to your grace period. The Credit CARD Act of 2009 requires lenders to deliver your bill to you at least 21 days in advance of when it's due. During this time, most lenders offer an interest-free grace period.

Factors that increase your APR may include federal rate increases or a drop in your credit score. By identifying changes to your APR and understanding the actions that led to your increased rate, you can take steps that may help reduce your interest charges in the future.

An annual percentage rate (APR) of 24.99% indicates that if you carry a balance on a credit card for a full year, the balance will increase by approximately 24.99% due to accrued interest. For instance, if you maintain a $1,000 balance throughout the year, the interest accrued would amount to around $250.00.

Is APR charged monthly? ›

The APR on a credit card is an annualized percentage rate that is applied monthly. If the advertised APR on a credit card is 19%, for example, then an interest rate of 1.58% will be imposed on the outstanding balance each month. As mentioned, any given credit card may come with several different APRs attached.

Paying the minimum on time can help you avoid penalties and fees. But keep in mind that you'll still be charged interest when you carry a balance. Paying your full balance each month could help you avoid paying interest altogether.

For someone with a good or very good credit score, an APR of 20% could be good, while a 12% APR may be good for someone with an excellent score. If your score is lower, an APR of 25% could be considered good. No matter your score, the lower the APR, the better.

Avoid loans with APRs higher than 10% (if possible)

“That is, effectively, borrowing money at a lower rate than you're able to make on that money.”

But there is a certain limit beyond which credit cards have notably high rates. Currently, average credit card APR is around 20% Reward credit cards tend to have higher APR, averaging above 23% If you have bad credit then it means higher APR, too; average APR is currently over 29%

Avoid loans with APRs higher than 10% (if possible)

“That is, effectively, borrowing money at a lower rate than you're able to make on that money.”