Comparing Credit Card Interest Rates Made Simple

What are The Two Different Types of Credit Card Interest Rates?

Your credit card interest rate is the percentage your issuer charges for borrowing money, and it will either be fixed or variable.

If you don't see it, call or email your issuer’s support team and have a representative look it up for you.

As the name suggests, you can expect a fixed rate to stay consistent over time. The only way your issuer can change it is if you make late payments, miss payments, or see a drop in your credit score.

On the other hand, a variable rate will fluctuate based on economic factors, such as the Federal Prime Rate, which can change as often as every six weeks. So, while you might be able to enjoy a sub-20% or even sub-15% credit card interest rate for a time, you also assume the risk of that number jumping up by 7%, 10%, or more.

Above all, the type of credit card interest rate you go with should depend on the amount of risk you’re comfortable with.

If you’re fiscally stable and responsible enough to handle some risk, you might benefit from a variable rate. But if you’d rather not deal with that level of unpredictability, you’re likely better off with a fixed rate.

Once you’ve decided on the type of credit card interest rate you prefer, you might want to jump right into finding the card with the sweetest rewards. But not so fast.

There’s one more factor to consider first: annual percentage rates, or APRs.

Types of APRs

As you may already know, when it comes to credit cards, there’s no difference between the terms “interest rate" and “APR.” They can be used interchangeably.

However, the one you’ll see most often (in promotional material and your monthly statements) is APR. And in addition to being fixed or variable, every credit card usually has several APRs that apply based on how you use it, including:

• Purchase APR - This is the rate that’s applied to your credit card purchases, and it’s the one you’ll be dealing with the most. If you don’t settle your balance by the end of the month, your purchase APR is the rate at which you’ll accrue interest once your grace period ends.
  
  
• Balance Transfer APR - Balance transfers are a good way to save money on interest by moving debt from a card with a higher rate to one with a lower rate, but there’s a catch. Although your balance transfer APR will likely be the same as your purchase APR, you won’t have a grace period to fall back on.


• Cash Advance APR - This rate applies to any cash withdrawals you make with your credit card. Ideally, you should never have to worry about this type of APR, as cash advances are risky business. These rates are typically much higher than your purchase APR and don’t come with a grace period, so the interest will kick in immediately.


• Promotional APR - Most issuers offer limited-time promotional APRs for new customers. Also known as “Introductory APRs,” these rates are usually low to 0% for anywhere from six to eighteen months, so you can rack up a balance within the given time period without worrying about accruing any interest.

How to Compare Credit Card Interest Rates

When picking out a credit card, looking for the best interest rates should be at the top of your priority list. But if that’s the only thing you’re looking out for, then you could shoot yourself in the foot.

The trick to finding the right card for you is striking a balance between the following factors:

1. Interest Rates: Study a credit card’s APRs from top to bottom, including the promotional rates, and remember to check the fine print! That way, you’ll know when your intro APR ends and your regular purchase APR begins. Weigh the rates against the level of risk you’re willing to take on, your spending habits, and how you plan to use the card, and choose the one that best fits the bill.
   
   PRO TIP: If you’re looking for the lowest credit card interest rates on the market, check out your local credit union. These institutions are legally required to cap their rates at 18%, and many of them also offer cash back and rewards!


2. Rewards & Sign-on Bonuses: What kind of rewards are you after? Miles? Travel points? Cash back? Keep in mind, the benefits you’re looking for could limit your selection. So, as you shop around, keep an eye out for cards with low APRs that also provide the rewards and welcome bonuses you’re looking for.


3. Fees: Some credit cards charge annual fees, late or missed payment fees, foreign transaction fees, balance transfer fees, and more. So, don’t forget to read the fine print, as these extra charges can creep up on you and make an otherwise ideal card too much of a risk.

For example, one card might have a slightly higher interest rate than another, but fewer fees, a solid welcome bonus, and a stronger rewards program could make it more beneficial for you in the long run.

Of course, the goal of having a credit card is not to accrue debt. It’s to collect rewards. But when you’re shopping for one, you get to choose the terms that work best for you, and it’s a big decision.

So take your time, and consider creating a spreadsheet of credit cards that tick all your boxes. You could also use a website like US News & World Report that allows you to compare credit cards directly based on their interest rates, fees, and rewards.

Happy hunting, and best of luck from the United Financial Freedom team!

Need Help Canceling Interest Payments?

With the highest interest rates in the business, credit cards can leave you saddled with more payments than you know what to do with.

But what if at any moment you could see how long it would take to fully pay off your credit card?

What if you knew the exact date?

What if you knew exactly how much cash to commit to your credit card balance at any given time to put you on the fast track to debt freedom?

That’s the power of the Money Max Account interest cancellation software.

Twenty-four hours a day, seven days a week, this award-winning program analyzes every aspect of your finances and employs high-level banking strategies and mathematical algorithms to direct you on how to pay the lowest interest possible and get out of debt faster.

It tells you what debt to pay, how much, and when, and adapts to every change in your income and expenses. Much like a GPS, it takes your “current location” into account and gives you the fastest route to your “destination,” guiding you from your present financial situation to a debt-free life.

If you’re struggling with credit card interest payments, you don’t have to risk paying more by using balance transfers or signing up for a new card.

The Money Max Account has helped tens of thousands of people reduce their interest payments and pay off all their debts—including their mortgages, credit card debt, and student loans—without making significant lifestyle changes. It can do the same for you.

At $2.6 billion in interest eliminated and counting, it’s not a matter of if it’ll work; it’s a matter of just how much debt you’ll pay off.

To learn more about the Money Max Account and find out exactly how much the program can save y ou, fill out the form below for your free consultation with one of our debt elimination experts.