Why is my APR so high with good credit?

Asked by: Mr. Jalen Roberts  |  Last update: August 27, 2022
Score: 4.9/5 (59 votes)

In finance, generally the more risk you take, the better potential payoff you expect. For banks and other card issuers, credit cards are decidedly risky because lots of people pay late or don't pay at all. So issuers charge high interest rates to compensate for that risk.

Why are my APR rates so high?

3. Credit card companies need to make a profit. Since credit cards are designed for large-scale consumption, issuers do business with all sorts of consumers. Because it's risky to lend credit to millions of Americans with varying credit histories, issuers charge higher average APRs across their entire customer base.

How do I lower my APR?

Some ways to do that include:
  1. Pay off your balance every billing cycle. You're only charged interest if you carry a balance from month to month. ...
  2. Understand your card's grace period. ...
  3. Turn on autopay. ...
  4. Make a budget.

What APR is too high for a car?

A high APR (“annual percentage rate”) car loan is one that charges higher-than-average interest rates. The legal limit for car loans is around 16% APR, but you will find lenders that get away with charging rates of 25% or more.

Is a 5.9 interest rate good?

On a 36-month loan, 5.9% APR with above-average credit is a bad rate. If you see a rate this high with captive financing, it could be because it's for a longer-term loan.

What does APR REALLY mean? | The Simple Way

31 related questions found

How much APR is too much?

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.

Can you negotiate APR on a car?

Yes, just like the price of the vehicle, the interest rate is negotiable. The first rate for the loan the dealer offers you may not be the lowest rate you qualify for. With dealer-arranged financing, the dealer collects information from you and forwards that information to one or more prospective auto lenders.

Can I ask for a lower interest rate on my car loan?

If you want to lower your car loan's interest rate, refinancing is likely to be your only option once you already have a loan. If you originally qualified for a higher interest rate than you wanted, waiting until you can refinance is typically what you need to do to lower your interest rate.

Does APR matter if I pay in full?

If you pay in full every month: APR doesn't matter

There's no carried-over balance on which the card issuer can charge interest. You get a grace period on purchases in the next month. That means interest won't accrue on new purchases until your next statement due date passes.

Can my APR go down?

It is possible to request a lower credit card APR. Before your issuer will grant one, they'll often consider a few factors: Your credit history, score, and risk. Your payment history.

What is the average APR for someone with excellent credit?

A good interest rate on a credit card is anything below 14%. That is roughly the average regular interest rate on credit cards for people with excellent credit.

Is a 29.99 APR good?

Dear Vera, It is an unfortunate truth that one can very quickly do major damage to one's credit score. However, the reverse is true when trying to build credit back up.

Is 12% interest on a car high?

Interest of 12% is really high, but since you've already bought the car, you can make your payments on time for six to 12 months and then refinance at a lower rate. “

Is a 26.99 APR good?

Again, these are averages, which means that a good APR would likely be one that is lower than the average. Credit cards often come with a range of APRs, like 16.99% to 26.99%. The higher your credit score, the more likely you are to get approved for an APR on the lower end of the range.

Is 3.9 A good APR for a car?

As of January 2020, U.S. News reports the following statistics for average auto loan rates: Excellent (750 - 850): 4.93 percent for new, 5.18 percent for used, 4.36 percent for refinancing. Good (700 - 749): 5.06 percent for new, 5.31 percent for used, 5.06 percent for refinancing.

Is 2.99 APR good for a car?

If you're buying a new car at an interest rate of 2.9% APR, you may be getting a bad deal. However, whether or not this is the best rate possible will depend on factors like market conditions, your credit background, and what type of manufacturer car incentives there are at a given point in time on the car you want.

Can car dealers mark up interest rates?

Generally, yes. Although there are some exceptions, the large captive finance companies and the large banks all authorize dealers to markup customer interest rate, and split the profits.

What is a good APR for a used car loan?

For used vehicles, the average interest rate can range from 3.61% APR with Super Prime to 19.87% for Deep Subprime. If you can get a rate under 6% for a used car, this is likely to be considered a good APR.

Is a 22.99 APR good?

High interest-rate cards like this are generally marketed to people who have less-than-stellar credit scores of around 650 or below, but even these customers should refrain from opting for a sky-high interest rate. “Once you get above 22.99%, you're better off getting a secured card,” Harzog says.

Is 23.99 APR good for a credit card?

This means that if you have an excellent credit history, then you might qualify for a rate as low as 13.99%, while those with fair or average credit may receive a rate as high as 23.99%. You might also see a range of rates, rather than a single APR, for balance transfers and cash advances too.

Is 2.49 APR good for a car loan?

“It never hurts to shop around for car loan rates, just as you would with car insurance. But 2.49% for 48 months sounds like a pretty solid deal. My advice is to sign the paperwork on that deal before you let it get away. It's unlikely you'll be able to find a better rate anywhere else.