Citi Rewards+ Card: Best For Everyday Purchases
Why we picked it: Citi is offering a generous sign-up bonus: Earn 20,000 bonus points after spending $1,500 within the first three months of account opening. That is worth $200 in gift cards. Cardholders also get a 0% introductory APR on purchases and balance transfers for 15 months. After that, the cards APR is 15.74% to 25.74%, variable. Theres no annual fee.
Pros: The Citi Rewards+® offers something unique: Not only will you earn 2X ThankYou points at supermarkets and gas stations as well as 1X points on all other purchases, but every purchase you make will be rounded up to the nearest 10 points. This feature helps you get more rewards out of every purchase, no matter how small.
Cons: One potential downfall lies in its redemption options: If you want to get the most value out of your rewards, youll have to redeem your points for travel purchases or gift cards.
Who should apply? If youre searching for a straightforward low-interest balance transfer card, the Citi Rewards+ is a strong contender. This card is an excellent option for balance transfers with the potential to maximize rewards on small purchases, particularly if youre an existing Citi customer.
Who should skip? Someone hoping for a long list of redemption options or fancy perks may be disappointed with this minimal frills card. Big spenders could potentially earn more with a card that rewards for a wider range of bonus categories.
Read our Citi Rewards+® Card review.
What’s The Best Way To Use A 0% Apr Credit Card
Keep in mind that you’ll need to make minimum payments on your balance and pay it off in full before the intro period ends to avoid interest.
What A Good Credit Card Apr Looks Like
A good for a credit card is anything below 14% — if you have good credit. If you have excellent credit, you could qualify for an even better rate, like 10%. If you have bad credit, though, the best credit card APR available to you could be above 20%. Even the best secured credit cards for building credit often have a credit card APR starting around 22.99%.
The highest credit card interest rates are usually found on:
Those with the lowest APRs tend to be low-interest credit cards and credit cards from credit unions. Some of the best low interest credit cards have a credit card APR range starting at 12% to 14%. Many popular credit unions offer credit cards with interest rates that start at 5.99% to 8% for their most creditworthy members.
READ MORE:Best Low Interest Credit Cards
For context, the average credit card APR across all credit card types ranges from 15.49% to 22.61% as of June 2020. Credit cards usually offer an APR range, rather than a single across-the-board rate for all transaction types.
A good way to improve your chances of getting approved for a low-interest credit card is to improve your credit score. Only consumers with an excellent qualify for credit cards with the lowest credit card APR.
| Metric | |
|---|---|
| Time to pay off debt | 3.9 years |
| $11,764 |
As you can see, having an 18% APR instead of a 10% APR tacks on more than seven extra months to your monthly payments and costs you $2,203 more in interest.
Recommended Reading: Monthly Interest On $1 Million Dollars
The Average Credit Card Interest Rate By Credit Score And Card
Insider’s experts choose the best products and services to help make smart decisions with your money . In some cases, we receive a commission from our our partners, however, our opinions are our own. Terms apply to offers listed on this page.
- The average credit card interest rate was 16.65% in the second quarter of 2022, according to Federal Reserve data.
- The type of card and your credit score will affect the interest rate you’ll pay on any balances.
- Higher credit scores bring lower interest rates, and reward cards have the highest interest rates.
- Read Insider’s guide to the best credit cards.
The average credit card APR was 16.65% in the second quarter of 2022, according to data from the Federal Reserve. But, your own credit card interest rate is likely to be different.
However, if you don’t pay off your balance in full each month, it can get expensive. It’s not unusual for a card to carry an APR in the 20% range, which means a balance can continue to grow and snowball for each month it stays on your card. According to Experian, the average credit card balance was $5,525 in 2021, down slightly from $5,897 in 2020.
Outside of paying off your card, there are a few factors that can influence the rate attached to your card, including your credit score and the type of card you have. Here’s how these factors influence your interest rate.
- Wells Fargo Active Cash® Card
- Citi® Double Cash Card
Who Should Get A Low
- The debt holder. For those with credit card debt or any other outstanding high-interest debt, a balance transfer card can be a no-brainer. By moving debt to an introductory interest-free account, you can pay down your balance faster and save money.
- The plan-ahead spender. From renovations to travel plans, when you know you have to make large purchases in the near future and wont be able to pay off the balance in a timely manner, a low-interest credit card can help minimize the debt. Some may even come with sign-up bonuses, which can help offset costs even further.
- The emergency spender. Emergencies happen, and an emergency fund is your best line of defense to cover these surprise expenses, followed by an interest-free loan or credit card with a long 0% intro APR. But when these options arent in the cards for you, a low-interest credit card can help cover emergency expenses. If you need to use a low-interest credit card, its a good idea to have a plan on how to pay off credit card debt.
Also Check: Compound Rate Of Interest Calculator
How Credit Card Rewards Work
With certain credit cards, you can earn rewards when you make a purchase. The type of rewards you earn and your earn rate differ by card, however.
Types of rewards in you can earn
The types of rewards you can earn can generally be broken down into four categories:
- Cash back. For every purchase you make, get a set percentage back in cash. The pay-out date for your cash back earned differs depending on the card. It can be monthly, annually or when you reach a minimum threshold.
- Travel benefits. Credit card travel rewards programs let you earn points or miles when you make purchases. You can use your rewards to offset the cost of flights, hotels, car rentals, vacation packages and more.
- General rewards. Most rewards programs offer the option to redeem the points youve earned for general merchandise, gift cards, experiences, entertainment, financial rewards, and more.
- Store perks. Many merchants have a co-branded credit card. The points you earn can be used in-store or online at any participating stores. Groceries, and merchandise are typical redemption options for store rewards cards.
Earn rates
When it comes to getting rewards, the earn rate is a critical factor. Every rewards card has a base earn rate, but some cards also have higher earn rates on certain types of purchases that can be highly lucrative. Knowing the difference between the two can help you maximize your rewards.
The rewards process
Tracking your rewards
Build Your Credit To A Good/excellent Level
People with higher credit scores tend to qualify for lower interest rates on any kind of loan, including credit cards. If your credit is fair or bad, you may not qualify for the most advantageous rates. The first step is to find out what your current score is and check for any issues or errors on your credit report. If your credit needs work, stick to a long-term strategy for improving your credit score.
Also Check: Where Can I Watch Person Of Interest
Best 0% Apr Credit Cards From Our Partners
Our pick for
Longest 0% intro APR period
0% intro APR for up to 21 months from account opening on purchases and qualifying balance transfers
Why We Like It
Pros & Cons
Product Details
The Wells Fargo Reflect® Card offers a 0% intro APR period that can potentially approach two years, if you make your monthly payments on time.
The Wells Fargo Reflect® Card offers a 0% intro APR period that can potentially approach two years, if you make your monthly payments on time.
Pros
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Few if any cards offer a promotional window like this one: You’ll get a 0% intro APR on Purchases for up to 21 months and 0% intro APR on Balance Transfers up to 21 months from account opening on qualifying balance transfers, and then the ongoing APR of 15.24%-27.24% Variable APR
Cons
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You won’t earn ongoing rewards, aside from being able to opt into one-time offers from My Wells Fargo Deals.
on Bank of America’s website, or call
0% intro APR on Purchases for 21 billing cycles and 0% intro APR on Balance Transfers for 21 billing cycles for any balance transfers made in the first 60 days
Why We Like It
Pros & Cons
Product Details
The BankAmericard® credit card is a solid option for people looking to start out with one of the longest interest-free periods available anywhere.
The BankAmericard® credit card is a solid option for people looking to start out with one of the longest interest-free periods available anywhere.
Pros
Cons
Our pick for
Ally Unlimited Cash Back Mastercard*: Best For Ally Bank Customers
- Rewards rate: Unlimited 2 percent cash back on every purchase
- Welcome offer: N/A
Ally Bank has been ranked the best bank by Bankrate, and if youre already an Ally Bank customer and want to stick with them, Ally Bank credit cards are worth a look.
The invitation-only Ally Unlimited Cash Back Mastercard is a straightforward 2 percent cash back card with no surprise fees, including no returned payment or over-limit fees. It also makes earning and redeeming rewards as simple as possible, with no limits on how much you earn, no expiration dates and no redemption minimum.
According to Ally Bank, the card may also be available with only fair credit, so if youve received a prescreened offer in the mail, its worth applying. You can also check if youre a good fit for the card based on your credit history through CardMatch. If youre able to get approved for this card, it could easily be the best cash back card available with an average credit score.
Don’t Miss: Lowes 12 Months No Interest
Pay Off Your Balance In Full
It’s very important to pay off any transferred debt or lingering new purchase balances before the intro 0% APR period ends. If you don’t, expect to be hit with the regular purchase APR. And if you have a store card, you could be hit with a bill for all the interest you accrued since the date you made your purchase or transfer . None of the cards on this list charge cardholders deferred interest.
Learn more: 5 things to do once your balance transfer is complete.
What Is The Average Interest Rate On A Credit Card
Currently, the national average interest rate for credit cards is 16.13%. But with interest rates expected to increase this year, .
For now, low-interest credit cards currently average 12.94%. That means people with good-to-excellent credit are able to find cards that fall well below that national average. Unfortunately, the average interest rate for people with bad credit sits at 25.80. So if your credit score needs a lot of work, it could be a struggle to get approved for a credit card with a good interest rate.
Read Also: Has Interest Rates Gone Up
What Is An Interest Rate
Card issuers refer to your credit card’s interest as your annual percentage rate . An APR is the interest you’re charged for borrowing money against your credit limit.
In most cases, you won’t be charged interest if you pay off your on time and in full each billing cycle. This applies to new purchases and typically excludes other transactions, such as balance transfers and cash advances, which often incur interest charges right away.
While card issuers express your interest rate annually, you can find the monthly interest rate, if you divide your APR by 12.
Let’s say you have an 18.74% APR: Divide by 12 to get 1.562% as your monthly interest rate. This means that whatever balance you carry on your credit card account will be charged a fee of 1.562% in addition to your payment. If your account balance is $3,000 during the month of July, you will pay $46.86 in interest for that month.
How Have Credit Card Interest Rates Changed Over The Years
In recent years, weve seen significant movement in interest rates, largely driven by the Federal Reserve. Rates rose significantly beginning in 2015 and continued to do so until 2019. The following year, the Fed dramatically lowered interest rates in response to the economic turmoil seen at the beginning of the pandemic. This year, however, the Fed has reversed course, raising rates multiple times, with the promise of several more significant hikes to come.
Before 2015, credit card rates were largely stable for several years, following the introduction of the Credit Card Accountability, Responsibility and Disclosure Act of 2009, better known as the Credit CARD Act. The pro-consumer law, signed by former President Barack Obama, brought enormous change to the credit card space. It set limits on when issuers could raise cardholders rates, changed how payments must be applied to balances, restricted certain fees and much more. Those changes forced issuers to scramble to figure out how to recoup the revenues lost under the CARD Act. As a result, credit card rates became volatile for several years one card even famously featured a 79.90% APR for a short time as banks determined what the market could bear.
Read Also: How High Will Interest Rates Go In 2022
Best Ongoing Low Interest Rate Credit Cards
If the introductory offer has a particular weakness, it is the fact that it is introductory. No matter how great the offer, it must come to an end eventually. At that point, the default APR of your credit card becomes remarkably important. The best way to avoid nasty interest rate surprises at the end of your introductory term or in general is to find a card that offers a low ongoing APR.
While the exact interest rate you are charged will depend primarily on your individual credit, you can take some of the chance out of the equation with careful card selection. All credit cards will have a designated range of potential interest rates specific to that card, and the range determines the minimum and maximum APR an applicant can receive. The top-rated cards on our list have APR ranges starting as low as 11.99% for qualified cardholders.
+See More Ongoing Low APR Offers
Even with the lowest possible ongoing APR, you can still find yourself paying higher interest fees than you are comfortable with. One easy way to reduce the amount of interest you pay is to make multiple payments throughout the month. This is because interest is compounded daily, based on your average daily balance. Making more frequent payments decreases your average daily balance and, thus, decreases your total interest.
Wells Fargo Active Cash Card
Our pick for: Highest flat-rate cash back
Among flat-rate cash-back cards, you’ll be hard-pressed to beat the Wells Fargo Active Cash® Card. It earns an unlimited 2% back on all purchases, which is excellent. But in addition, the card offers a rich sign-up bonus and a generous 0% intro APR on both purchases and balance transfers. That’s an impressive, hard-to-find combination of features on a card with a $0 annual fee. Read our review.
Read Also: Mortgage Calculator Principal And Interest
What Is The Best Credit Card
The best credit card is the one that rewards your personal spending habits in a way that makes sense for your redemption preferences. Look for cards that offer bonus points in categories you spend heavily in, such as dining, gas or groceries. Then, make sure the type of rewards youre earning lines up with your lifestyle. Travel rewards are popular, but cash back can make more sense for many customers.
How Credit Card Interest Works
Say your card has a 19% interest rate which is pretty standard. You pay $100 to buy a pair of concert tickets for yourself and a friend. But how much interest will those tickets accrue if you dont pay your credit card balance and your cards grace period has passed?
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