If you’re using a credit card, you’ve probably heard of the many acronyms associated with them. For example, API, ACH, ETA, LOC among many others. All of them have different meanings and they are all quite important. But the one that most people really focus on is APR

You have likely heard of APR, but you may not fully understand what it is. It is basically the Annual Percentage Rate attached to your card. In simple terms, it’s the percentage of your loan interest that should be paid by the end of the year. For example, if your credit or loan, is $2,000, and your APR is set at 10%, you’ll pay $200 annually.

When it comes to picking credit cards, you should always consider the APR of the card before applying. Because, by the end of the day, the lower your APR, the less interest you’ll have to pay off. Finding out your APR ensures that you get a good deal in the end. So, what’s the highest APR you should accept when it comes to credit cards?

highest APR

Variable APR Or Fixed APR?

You’ve probably heard of the variable and fixed APR in your credit card hunt, right? Well, if you haven’t – variable APR is the most common type of APR that is used when it comes to credit cards today. This is where your APR fluctuates depending on the market rate.

When it comes to a fixed APR, not many cards have this option. This is where the APR is set and shouldn’t change no matter the market rate. Mostly, you can find these cards with smaller banks.

Different Types Of APR

When using a credit card, you always have to keep in mind that there are five types of APR that you may incur. They are all dependent on the type of action you take with the card. They mostly depend on how fast you pay off your balance and how you used the card. The five types of APR are as follows.

  • Balance APR

This is where balances transferred from other cards are charged an APR. There’s often no grace period involved with this APR as you’re charged from the moment the balance is transferred.

  • Introductory APR

You’ve probably heard of ads where the credit card issuer offers low introductory APR. It’s a common perk today as most cards offer as low as a 0% intro APR. This is usually set for a specific period of time as well. Simply put, you can carry a balance, in this case, without having to incur extra charges.

  • Penalty APR

One thing you don’t want to do with when it comes to credit cards is to make late payments. Most cards will increase your APR when you’re late with payments. You also risk your credit score when you make payments and you 0% intro APR may be terminated as well.

  • Cash Advance APR

When you withdraw cash out of your credit card, there are fees charged in that scenario. And, the APR charged when you get a cash advance is usually higher than when you make a purchase. With this type of APR, there is no grace period as well.

  • Purchase APR

The most common and expected type of APR when it comes to credit cards is purchase APR. Credit cards typically offer credit for purchases. When it comes to purchase APR, all purchases not paid for by the end of your grace period incur this APR.

What Is A Good APR And How Do You Qualify?

The average rate of APR today, considering the tough economic times faced in the world, is 15.09%. That’s according to a report released by the Federal Reserve in February of this year. So, in general, you’ll find most cards charging a rate of 16.91%, which makes any APR below 17% a good APR.

When it comes to qualifying for a lower APR, you first have to consider your credit score as it plays a part in your APR. The higher your score, the more likely it is that you are eligible for low APR. If you have a low credit score, you may not have much say in the highest APR you can accept.

highest apr


When going for a credit card, other than looking out for the perks alone, it is wise to have a look at APR as well. It makes it easy for you to qualify for the lowest if you have a good score. Also, the faster you pay your balance the better when it comes to APR.

*Note: There are risks involved when applying for and using a credit card. Consult the bank’s terms and conditions page for more information.