National nonprofit credit counseling agency Take Charge America educates consumers on APRs, how rates are determined and how to negotiate better rates

Credit card interest rates can vary widely and change frequently. Being aware of what determines interest rates and how they can be managed helps ensure costs don’t climb out of control and credit scores don’t suffer.

“Knowing interest basics helps people make informed choices about their finances,” said Amy Robbins, associate director of operations with Take Charge America, a nonprofit credit counseling and debt management agency. “Credit card interest rates aren’t etched in stone, and under the right circumstances can be negotiated.”

Robbins answers some of the most common questions about interest rates:

What are credit card interest rates?

Interest rates are the cost credit card holders pay for borrowing money using their credit card. This fee is typically tied to an “annual percentage rate” (APR) charged on your outstanding balance. Credit scores, history, on-time payments and credit utilization factor into your APR. This is a major reason why credit card interest rates vary from card to card and person to person.

Is there a “good” or “bad” interest rate?

According to the Consumer Financial Protection Bureau, the average APR on credit cards nearly doubled from 12.9% in late 2013 to 22.8% in 2023 — the highest level recorded since the Federal Reserve began collecting this data in 1994. So “good” and “bad” can be subjective. In general, below 20% is considered “good.”

What’s the difference between a “fixed” and “variable” interest rate?

When an interest rate remains the same, it’s called a fixed rate. Variable rates change over time depending on general market conditions and the overall economy. Some cards come with an introductory fixed rate that transitions to a variable rate, so it’s important to read the fine print.

How can I get a better interest rate?

Your interest rate is tied to your credit score. So, if you pay bills on time and pay more than the minimum balance due (or pay off your balance altogether) each month, you have your best shot at a better rate. You can also call your creditor to negotiate for a better rate. They will take your credit history and utilization into account. If you are in serious debt and struggling to meet minimum payments, you can consider a debt management plan in which a credit counseling agency negotiates concessions, such as lower interest rates, on your behalf.

About Take Charge America, Inc.

Founded in 1987, Take Charge America, Inc. is a nonprofit agency offering financial education and counseling services including credit counseling, debt management, housing counseling and bankruptcy counseling. It has helped more than 2 million consumers nationwide manage their personal finances and debts. To learn more, visit takechargeamerica.org or call (888) 822-9193.

Andrea Aker Aker Ink (602) 339-7339 andrea.aker@akerink.com