When a credit card company loans a cardholder an amount of money, it keeps track of the amount that needs to be paid back. Since a company would make no money by simply lending and collecting, credit cards charge interest on the purchases made with the card.
Different cards have different interest rates, and these are referred to as the APR–Annual Percentage Rate.
The APR on a credit card will depend on a number of factors. The most important is your credit. Since people with good credit can have their choice of creditors, very low APR rates are reserved for those with outstanding credit. A scale increases APR in relation to the credit of the applicant, so that someone with average credit will have a slightly higher APR than someone with good credit, and so forth.
Getting the Best APR You Can
Another important factor in determining the APR on your credit card is the company that is issuing it. Credit card companies are competing against each other for business, and a sure way to draw more clients is to offer competitive interest rates. Even without perfect credit, you can get a good APR from a company that wants your business.
One thing to watch out for is a card with a low “introductory” APR. These cards offer a very low APR for the first few months, but then hike up the rates. Oftentimes, the established APR is hidden in the fine print, so make sure your APR is good for more than a few months before accepting a card.