What Is Considered High APR on a Credit Card?

Introduction

What counts as a high annual percentage rate (APR) on a credit card depends on the current economic environment and your personal credit profile. Because the Federal Reserve adjusts benchmark interest rates throughout the year, the definition of a "good" or "bad" rate is constantly shifting. Currently, a high APR is generally any rate that sits significantly above the national average, which has recently hovered between 21% and 23%.

MoneyAtlas provides tools to compare these rates side by side so you can determine if your current cards are costing you more than they should. This post covers how to identify high rates, why they vary by credit score, and what you can do to lower your interest costs. Understanding these benchmarks is the first step toward deciding if a balance transfer or a different financial product is a better fit for your goals.

Defining a High Annual Percentage Rate

The annual percentage rate (APR) is the yearly cost of borrowing money on your credit card. While it is expressed as an annual figure, credit card companies actually use it to calculate interest on a daily basis. If you carry a balance from one month to the next, the APR determines exactly how much that debt will grow.

A high APR is one that makes it difficult to pay down the principal balance because a large portion of your monthly payment goes toward interest charges. In the current market, rates above 25% are widely considered high. These rates are common for store credit cards, cards for people rebuilding credit, and premium rewards cards. If your rate is in this range, carrying even a small balance can lead to a cycle of debt that is hard to break.

Apply Now

Aspire® Cash Back Rewards MastercardRead our full review

Apply Now

How the National Average Sets the Benchmark

To know what is high, you first have to know what is average. The Federal Reserve tracks the average interest rate for all credit card accounts in the United States. As of early 2024, the average APR on accounts that were assessed interest sat near 22.7%. This represents a significant increase from just a few years ago when averages were closer to 15%.

When market rates rise, even people with perfect credit see their APRs go up. This is because most credit cards have variable rates. They are tied to the prime rate, which is the base interest rate that commercial banks charge their most creditworthy corporate customers. When the Federal Reserve raises its benchmark rate, the prime rate goes up, and your credit card APR usually follows within one or two billing cycles.

Typical APR Ranges by Credit Score

Your credit score is the most significant factor an issuer uses to decide your specific rate. Most credit cards are advertised with a range, such as 18.99% to 29.99%. Where you land in that range depends on your creditworthiness.

Excellent Credit (740 to 850): Borrowers in this tier typically see the lowest available rates. A "high" APR for this group is anything above 20%. Many cards for excellent credit offer rates in the 17% to 19% range, though premium rewards cards may still be higher. If you are comparing options in this tier, start with our best credit cards comparison.

Good Credit (670 to 739): This is the most common credit tier. A high APR for this group is usually 24% or above. Most people in this range can expect rates between 20% and 23%.

Fair Credit (580 to 669): Borrowers with fair credit often face rates that are consistently above the national average. A high APR for this group would be 28% or more. Rates in the 25% to 27% range are standard here, and fair-credit card options can help you compare what is available.

Poor Credit (579 and below): If you are building or rebuilding credit, almost every rate will feel high. APRs for these cards often start at 29% and can go as high as 36%. In this tier, the APR is less about the cost of borrowing and more about the risk the bank is taking.

Why Different Transactions Have Different Rates

It is a common mistake to think a credit card has only one APR. Most cards actually have several different rates depending on how you use the card. You can find these listed in the Schumer Box, which is the standardized table of rates and fees included in your cardmember agreement.

Purchase APR

This is the standard rate applied to the things you buy, like groceries, gas, or online orders. This is the rate most people refer to when they ask what is considered a high APR. If you pay your statement in full every month, you usually have a grace period that allows you to avoid this interest entirely.

Cash Advance APR

If you use your credit card to get cash from an ATM, you will likely be charged a cash advance APR. This rate is almost always higher than the purchase APR, often reaching 29.99%. Furthermore, cash advances usually do not have a grace period. Interest starts accruing the moment you take the money.

Balance Transfer APR

This rate applies to debt you move from one credit card to another. While many cards offer 0% introductory APRs on balance transfers for 12 to 21 months, the standard balance transfer APR after that period is often the same as the purchase APR. If you want a deeper breakdown, read how balance transfers work.

Penalty APR

This is the highest rate of all. If you miss a payment by more than 60 days, many issuers will trigger a penalty APR. This can be as high as 29.99% or even 32%. This rate can stay on your account indefinitely or until you make several consecutive on-time payments.

The Factors That Drive Your APR Up

Aside from your credit score and the prime rate, several other factors contribute to a high APR. Understanding these can help you choose a card that is less likely to become expensive over time.

Card Type: Rewards cards, especially those with high cash back or travel points, usually have higher APRs. The bank uses the interest income to help fund the rewards program. If you never carry a balance, the high APR does not matter. If you do carry a balance, the interest will likely cost more than the rewards are worth. If you are comparing rewards-heavy products, browse credit card reviews.

Retail and Store Cards: Store-branded credit cards are famous for having high APRs. It is common to see store cards with rates of 30% or higher. These cards often have lower credit requirements, making them easier to get, but much more expensive to carry a balance on.

Unsecured vs. Secured Cards: Unsecured cards do not require a deposit and generally have rates based on your credit score. Secured cards require a cash deposit that serves as collateral. While you might think the collateral would lead to a lower APR, many secured cards still have high rates because they are marketed to high-risk borrowers.

The Real Cost of Carrying a High-Interest Balance

To see why a high APR is dangerous, you have to look at the math. Credit card interest compounds, which means you pay interest on your interest. Most issuers use an average daily balance method.

Imagine you have a $5,000 balance on a card with a 25% APR.

1. Divide the 25% APR by 365 to get the daily periodic rate: 0.0685%.
2. Multiply that daily rate by your $5,000 balance: $3.42.
3. Over a 30-day month, you will be charged roughly $102.60 in interest.

If you only make the minimum payment, which might be around $125, only $22.40 is actually going toward your debt. The rest is just covering the interest for that month. This is why high APRs make it feel like you are standing still even when you are making payments every month.

How to Find and Read Your APR Terms

You do not have to guess what your APR is. Federal law requires issuers to be transparent about these rates. You can find your specific APR in three places:

• Your Monthly Statement: Look for a section titled "Interest Charge Calculation." It will list your balance, the APR for that period, and the interest fee charged.
• The Schumer Box: This is the table of rates and fees found in your original credit card agreement. If you lost the paper copy, most issuers provide a digital version in the "Legal" or "Account Terms" section of their website.
• The Mobile App: Most major bank apps list the current APR under "Account Details" or "Card Settings."

When reading these terms, check if the rate is variable or fixed. Almost all modern credit cards are variable, meaning they will change when the Federal Reserve moves rates. If you see "V" or "Variable" next to your rate, expect it to fluctuate over time. For a step-by-step walkthrough, see how to check APR on your credit card.

Strategies for Managing High-Interest Debt

If you have determined that your current APR is too high, you have several options to reduce the cost of your debt. You do not have to accept a 25% or 30% rate as a permanent fixture of your financial life.

1. Request a Rate Reduction

Many people do not realize they can simply call their credit card issuer and ask for a lower APR. If you have been a customer for at least a year and have a history of on-time payments, the issuer may be willing to lower your rate. This is especially effective if your credit score has improved since you first opened the account. Mentioning that you have received offers for other cards with lower rates can sometimes help the negotiation. If you want help preparing for that call, read how to request a lower APR.

2. Compare Balance Transfer Cards

For those with good or excellent credit, a balance transfer card is a powerful tool. These cards often offer a 0% introductory APR on transferred balances for 12, 15, 18, or even 21 months. Moving a high-interest balance to a 0% card allows every dollar of your payment to go toward the principal debt. MoneyAtlas allows you to compare balance transfer offers to see which one has the longest window and the lowest transfer fee. A good place to start is the balance transfer card comparison.

3. Consider a Personal Loan

If you have a large amount of credit card debt, a personal loan might be worth comparing. Personal loans often have fixed interest rates that are significantly lower than credit card APRs. For example, while the average credit card APR is over 22%, a borrower with good credit might qualify for a personal loan at 11% or 12%. This also consolidates multiple credit card payments into one predictable monthly bill with a clear end date. You can compare personal loans to see whether a fixed-rate option could lower your total interest costs.

4. Use the Grace Period

The most effective way to handle a high APR is to never pay it. If you pay your statement balance in full every month by the due date, the APR becomes irrelevant for purchases. Most cards offer a grace period of 21 to 25 days where no interest is charged on new purchases. However, be aware that if you carry even $1 over from the previous month, you usually lose the grace period for all new purchases until the balance is completely cleared.

Summary Checklist for Evaluating Your APR

• Check the current national average: If your rate is more than 2% or 3% above the 22% benchmark, it is high.
• Review your credit score: Ensure your rate matches your credit tier. If your score went up, your APR should go down.
• Identify the transaction type: Make sure you are looking at the purchase APR, not the much higher cash advance or penalty rates.
• Do the monthly math: Calculate how much interest you are paying in dollars. If that number makes you uncomfortable, it is time to look at other options.
• Compare alternatives: Use comparison tools to look for 0% intro offers or lower-rate personal loans.

MoneyAtlas makes it easier to compare over 1,500 financial products so you can see how your current rates stack up against the rest of the market. Whether you are looking for a new card with a lower ongoing rate or a balance transfer tool to wipe out existing debt, having the right data is the first step toward a better financial decision. For a broader look at APR basics, read what regular APR means for credit cards.

FAQ