Most of us don't know our credit card APR

Most of us don't know our credit card APR

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Are you getting the best deal on your credit cards? If you regularly carry a balance, a new survey from suggests there's almost a 50/50 chance you don't know how good your deal is because you aren't sure what the annual percentage rate (APR) is on your cards.

The poll of 2,315 adults found that 48% of credit card holders who carry balances weren't sure about the interest rates on their credit cards. Only 39% of cardholders with balances claimed to know the interest rates on all their cards.

Worse yet, cardholders making less than $40,000 per year were significantly more likely not to know the APRs on their credit cards than higher-income groups. In general, lower-income consumers have the greatest need to track APRs, because they have tighter budgets and less room for error.

Credit card APRs are at an all-time high average of 16.71%, and they are likely to go higher. If you have a variable-rate APR, as most cards do, the rate is tied to the issuing bank's prime rate. That rate typically rises every time the Federal Reserve raises benchmark rates, as they did in June.

The card company will notify you of an upcoming rate change if you bother to read the notice. Otherwise, your interest payments may be going up without you realizing that it's happening.

It's not hard to check the APR of any card by law, it will be printed under the card's terms and conditions and will be included in the monthly interest calculation section of your credit card statement. If you've never looked at that section, you probably aren't aware that the APR may be higher for cash advances or balance transfers than it is for regular purchases.

You also may not be aware of the penalty APR, which is the rate you'll pay if you miss payments. Penalty APRs are often 30% or higher. Terms vary, so check the rules for your cards. Typically, you won't incur a penalty APR until you miss two payments but it can take up to six consecutive on-time payments before your regular APR is restored. Late payments can also hurt your credit score, which may increase the interest rates you pay on anything from a mortgage to a personal loan. You can check your credit score and read your credit report for free within minutes using Credit Manager by MoneyTips.

Are you afraid of looking at your credit card statements and APRs because you won't like what you see? Get over your fear. By checking your APR and doing some research on comparable cards, you'll know if you need to change.

If you don't like the APR you see, how do you improve it? Matt Schulz, Senior Industry Analyst for, says, "The best way to get the bank to lower your interest rate a lot of times is to just ask."

According to Schulz, few consumers ask for a reduced APR, but 80% of those who do are successful. If you're a good customer who makes payments on time, the issuing bank would rather retain you as a customer than spend money replacing you. Cite offers from competing cards, and you have a decent chance of success because they know you're motivated enough to look at alternatives.

It's best to never charge more than you can afford to pay off at the end of the month. You never pay interest charges, and you don't care about credit card APRs you can optimize your cards for rewards or other perks without regard to rates. However, if you do carry a balance, at least make sure you understand how much you're paying for that privilege. You can't find the best card choices or make a meaningful budget without that information.

If you want more credit, check out our list of credit card offers.


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