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

FAQs

Is a 24.99% APR Good or Bad? ›

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.

A 24.99% APR is not good for mortgages, student loans, or auto loans, as it's far higher than what most borrowers should expect to pay and what most lenders will even offer. A 24.99% APR is reasonable for personal loans and credit cards, however, particularly for people with below-average credit.

To determine if an APR is good or not, look at the average rates for people with the same credit score as you. 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.

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.

It depends on the type of card you're looking at, as well as your own credit. A credit card APR below 10% is definitely good, but you may have to go to a local bank or credit union to find it. The Federal Reserve tracks credit card interest rates, and an APR below the average would also be considered good.

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.

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.

Key Takeaways

Your interest rate may have nothing to do with your credit score. Rewards credit cards typically charge a higher APR than cards without rewards. When you pay your entire statement balance by the due date, you won't be charged interest on purchases.

More recently, the Fed has been taking measures to make credit more costly and fight inflation with its higher target interest rates. It is also selling off securities that are on its balance sheet, in so-called “quantitative tightening,” in order to reduce the money supply and slow down the economy.

Does high APR affect credit score? ›

Credit reports do not track the interest rates on loans, credit cards or other accounts, so those rates cannot factor into credit scores. While they do not have a direct impact on credit scores, rising interest rates can affect several factors that do influence credit scores.

An annual percentage rate (APR) of 24% indicates that if you carry a balance on a credit card for a full year, the balance will increase by approximately 24% due to accrued interest. For instance, if you maintain a $1,000 balance throughout the year, the interest accrued would amount to around $240.00.

Car Loan APRs by Credit Score

Excellent (750 - 850): 2.96 percent for new, 3.68 percent for used. Good (700 - 749): 4.03 percent for new, 5.53 percent for used. Fair (650 - 699): 6.75 percent for new, 10.33 percent for used. Poor (450 - 649): 12.84 percent for new, 20.43 percent for used.

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.

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.

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.

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.”