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How to Apply for Your First Credit Card


Finding the Best Credit Card Interest Rate

A good interest rate is one of the most important things to look for in a credit card. A card with a high interest rate will be more difficult to pay off, and you'll end up paying much more in the long run. For example, if you're carrying a balance of $2,000 on a credit card with an APR of 15 percent, your interest for one month will be $25, but if you carry the same balance on a card with a 25 percent APR, the interest for one month would be $41.67. Just imagine how that difference in interest will add up over months and years [source: Investopedia].

To keep from paying more than you have to, you need to shop around for a good rate. A good guideline to use is the average APR, which you can find pretty easily online [source: Bankrate.com]. Since this rate is the national average, a person with well-established, excellent credit can expect a rate that's a little lower, while someone with a lower credit score or with no established credit will pay a little more.

Remember that not all types of cards are created equal when it comes to interest rates. Department store cards and gas cards often have some of the highest interest rates, while a card you get from your own bank or credit union will probably offer you a lower rate. Your credit card's interest rate is especially important if you'll be carrying a balance on the card. For example, a gas station card with a high interest rate isn't such a big deal if you use it just for convenience and pay in full every month, but a big shopping spree on a high-interest department store card can haunt you for years to come. If you intend to carry a balance on your credit card, shop around for a good rate. Talk to a manager at your bank or credit union, check out the current average APR, and research interest rates online. Your wallet will thank you later.


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