If you're what the credit card industry refers to as a "transactor" — someone who uses their card for convenience and rewards and pays the bill in full every month — then your APR is pretty much irrelevant, because you'll never pay a dime in interest.

On the other hand, if you're a "revolver" — someone who uses cards to float purchases they can't pay off all at once and carries debt from month to month — then your APR is very important, because it dictates how much you pay in interest.

When you're talking about credit cards, there is no difference between your interest rate and APR. They're the same thing. That leads to another question: Why do credit card issuers refer to it as the "APR" rather than the interest rate? Mostly because federal truth-in-lending laws require it.

With some financial products, such as mortgages, the APR can be significantly different from the stated interest rate. Those other charges are not included in the credit card APR calculation, in large part because issuers cannot predict who will have to pay them or how much they will pay.

And as discussed above, if you pay your bill in full every month, you won't pay any interest at all, so the stated APR on your account isn't even charged to you.

Once that introductory period runs out, interest will be charged at the ongoing APR — but only on your balance going forward. There is no "retroactive" interest. Zero-percent periods on credit cards are different from the "no interest for 12 months" offers you see in stores. Those are what's known as "deferred interest.

If you have any balance remaining at the end of the period, you will be charged interest on your whole purchase, going all the way back to the time of purchase. That could cost you hundreds of dollars. Purchase APR.

This is the rate your card charges when you pay for things with the card. Most credit cards offer a grace period: If you pay your balance in full every month, you won't have to pay interest on purchases.

If you roll over debt from one month to the next, then interest will start adding up on a purchase as soon as you make it. Balance transfer APR.

This is the rate on debt that you've moved to the card from somewhere else. Cash advance APR. This is the rate charged when you use your credit card to get cash from an ATM. Interest usually starts adding up on cash advances immediately. Grace periods don't apply.

Introductory APR. Sometimes called a "teaser rate" this is a low interest rate offered when you first open your account.

Ongoing APR. This is the "regular" rate that goes into effect once any introductory APR period expires. Variable APR. Most credit card interest rates are tied to the prime rate. When the prime rate goes up or down , your credit card's interest rate will usually go up or down an equal amount.

Credit card issuers are required by law to clearly state the interest rate on a credit card before you apply. You can find the interest rate or rates charged by a card in its "terms and conditions sometimes referred to as the fine print. When looking at a card online, look for a link that says something like "See terms and fees" or "View rates and fees" or "Offer details.

With some cards, everyone has the same APR. This is common especially with cards for people with bad credit in which the rate is very high or super-low-interest cards for people with good credit. Many cards charge a range of APRs.

It's common to see a card saying it charges something like " See below for how your credit score affects your interest rate. Rewards cards tend to charge higher APRs. Cash-back and travel-rewards programs are expensive, and one of the ways credit card issuers pay for them is by charging higher interest rates on balances on rewards cards.

The interest rate you pay on your credit card is heavily dependent on your credit history, which is summed up in your credit scores. Interest rates are how issuers put a price on risk:. When you have a low credit score, lenders see a higher risk in lending you money.

As a result, the interest rate charged by your credit card will be higher. When you have a high credit score, the risk is lower that you wont repay borrowed money.

So the interest rate on your credit card will be lower. If a card advertises a range of APRs, a lower score will put you toward the higher end of that range or you might not qualify for a card at all , while a high score will put you on the lower end of the range.

As a very general rule of thumb:. As with most financial products, the best interest rates on credit cards are available to those with the strongest credit profiles.

Improving your credit is the first step toward improving your rate. Steps to take:. Know your credit score. You can get free access to your score through NerdWallet.

Get your free score here. This applies not only to credit cards, loans and other lines of credit, but also to utility bills and other accounts.

Unpaid bills that that go into collections can seriously hurt your credit. Keep your credit utilization low. Limit your credit applications. New accounts lower the average age of your open lines of credit, which makes up part of your credit score.

Multiple credit inquiries from applications can also ding your score. Keep accounts open. Unless a card has an annual fee, keep it open and active, even if for only one bill a month.

This will help both your credit utilization and the length of your credit history. Check each of your credit reports each year for errors and discrepancies. A higher APR costs you money in two ways:.

First, obviously, it increases the amount of interest charged on your purchases. Second, because you are paying more in interest, you have less money available to pay down the principal — the debt you actually put on the card. That means you could stay in debt and pay interest for a longer time.

Let's walk through an example and see how a higher APR affects you at every turn. The minimum payment on a credit card is typically made up of all the accrued interest, plus any fees, plus a percentage of the principal the money you actually spent on the card.

In this case, let's say that percentage is 1. That's more than the minimum and paying more than the minimum is always good , but it's not enough to cover their debt entirely.

This is a common way people use credit cards — they're "revolvers" who pay down slowly over time. For each cardholder, the interest charges will shrink each month as they pay down the principal.

But the one with the lower APR will get out of debt more quickly and pay less in interest:. As discussed, you can avoid interest entirely by paying your balance in full every month. But that's not always possible for everyone.

Sometimes carrying a balance is unavoidable. Here are some options. The minimum payment shown on your billing statement is the absolute least you can pay without incurring a penalty.

It won't get you very far toward paying off your debt, though, as the above example makes clear. To see real interest savings, you need to pay interest on less money , and that means attacking the principal by paying more than the minimum. We've created a calculator to help you see how much you could save in interest by paying down your credit card balance.

See the calculator here. This may be an option if your credit score has improved considerably since you opened the account. The issuer might knock some points off your rate, or move your account to a card with a lower rate. You issuer might say no to your request, but you don't know unless you ask.

If you find you're consistently carrying a balance a from month to month, look for a card with a low ongoing interest rate. Many of the cards on this list are good for transfers, but check out our best balance transfer credit cards for further options.

Once you've decided what type of card to look for, compare cards based on the following factors. Read the fine print before applying. If you expect that you'll be carrying a balance regularly, the ongoing APR is an important consideration.

If you'll need to transfer a balance, this fee is an important consideration. Depending on the APR on the card you transfer the debt to and how long it takes you to pay it off, you could save more in interest than you pay in transfer fees.

A few cards charge no transfer fee. Of course, if you're only interested in purchases rather than transfers, this fee is irrelevant. Some cards even require excellent credit, generally defined as or better. It's important to pay your bill on time every month.

If punctuality is an issue for you, look into a card's penalty policies and, for your own sake, work on your punctuality. Saving money is the primary reason to get a low-interest credit card, so you shouldn't be paying an annual fee on such a card.

Most major credit card issuers and many smaller ones give cardholders free access to a credit score. When you're looking to manage debt with a low-interest card, it's smart to keep an eye on your score.

When you're using the card to finance a big purchase, those benefits can amount to an instant discount on the purchase. Although a card with a low ongoing rate can save you a lot of money over time, you're still paying interest. Apply those savings toward whittling down your debt faster.

With any card, watch your balance. Looking to transfer a balance to save money? Our roundup of the best balance transfer cards evaluates cards — including many of the cards on this page — with that specific goal in mind.

You might not. If you pay your balance in full every month, the APR on your credit card doesn't matter, because you're never actually charged interest. In that case, consider a rewards credit card , which gives you a little something back very time you make a purchase.

Rewards cards fall into two major categories: cash back credit cards and travel credit cards. To view rates and fees of the Blue Cash Everyday® Card from American Express, see this page. Learn how NerdWallet rates credit cards.

Zero-percent cards are good for people who want to spread out payments on a large purchase or gain breathing room to pay down debt without interest. A low-interest credit card charges an ongoing interest rate that's lower than other cards on the market. That roughly translates to a credit score of or better — although credit scores alone do not guarantee approval for any credit card.

In fact, closing the account could hurt your credit score by reducing the amount of credit you have available, which could increase your credit utilization. If the card charges a fee, however, or if you fear that the open credit line will tempt you to overspend, then closing it might be the best action.

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