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Your credit history is often born when you get your first credit card. You could use it to build strong credit for the future if you use it responsibly. When choosing a new credit card, the APR is an important consideration.
An APR that is below the current average interest rate is considered good. However, what constitutes a good APR will vary depending on the type of credit card and your creditworthiness. This guide will teach you everything you need to know about APR, credit cards, and credit building.
The annual percentage rate (APR) on a credit card is the total cost of the loan expressed in annual terms. The APR on a credit card includes the interest rate and fees, such as late fees or returned payments.
According to the Federal Reserve, the national average credit card APR in the United States was 16.44 percent in November 2021. A good credit card apr, according to SoFi, is one that is at or below the national average. However, a consumer’s credit score may play a role in qualifying for a good APR.
Credit card users should check to see that they’re not maxing out or exceeding their credit lines. Missed or late credit card payments can also result in late fees or interest rate increases.
Making the minimum payment on time on their credit card can help them avoid penalties and keep their accounts in good standing. They can avoid paying interest and improve their credit score by paying their bill in full.
Keeping a credit card balance below the credit limit helps improve one’s credit score. That’s because their credit utilization ratio impacts their credit scores.
Maintaining a low balance may also put consumers in a better position to pay off their debt in full each month. This can help establish a regular payment history without incurring additional interest.
Consider using account alerts to be notified when your account balance falls below a certain threshold to avoid late fees and overdrafts. It’s a good idea to be aware of fees that could increase the amount you owe each month if you use a credit card.
Using your card regularly can help you establish a track record of paying bills on time and in full. It can also help ensure your card stays active. Another advantage of using your card is that it can be safer than cash.
When determining a good credit card apr, they can use the current average APR as a guideline. However, what constitutes a good APR is determined by a user’s credit score, history, and the type of credit card you’re considering.
If you’re looking for a credit card, SoFi is an excellent place to start. The card has no annual fee and offers cashback rewards. You can also get a lower APR by making 12 monthly on-time payments of at least the minimum amount due.