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Understanding Credit Card Interest Rates with O1ne Mortgage

At O1ne Mortgage, we prioritize consumer credit and finance education. This post aims to provide an objective view to help you make the best decisions regarding your credit card interest rates. For any mortgage-related needs, feel free to call us at 213-732-3074.

Is There a Maximum Credit Card APR?

There is no federal law that limits the interest rates credit card companies can charge in general. However, for active-duty military service members and their covered dependents, the Military Lending Act caps interest rates at 36%. Additionally, some states have usury laws that limit interest rates on various loans, but these typically apply to the state where the credit card issuer is based.

What’s a Good Interest Rate on a Credit Card?

A good interest rate on a credit card is generally one that falls below the national average. As of Q1 2023, the average APR on credit cards was 20.92%. Credit card APRs often fluctuate with changes in the federal funds rate, which can affect both new and existing card accounts.

How to Check Your Interest Rates

To find out your current interest rate, check your credit card statement or new card offer. The Schumer box on these documents will show APRs and other charges, including the rate you pay on balances carried over month to month.

Other Factors That Affect Your Rate

Your credit card interest rate can depend on several factors:

• Credit score: Better credit can qualify you for lower APRs.
• Promotional rates: Some cards offer limited-time promotional interest rates.
• Penalty APRs: Late payments can trigger higher penalty interest rates.
• Cash advance rate: The APR on cash advances may be higher than your regular purchase rate.
• Secured vs. unsecured cards: Secured credit cards typically have higher interest rates than unsecured cards.

How to Find the Best Interest Rate on a Credit Card

If you’re looking for a new credit card, follow these steps to secure the best APR:

1. Check Your Credit: Good credit can help you get the best interest rate. Obtain your credit reports from Experian, TransUnion, and Equifax.
2. Compare Cards: Use online tools to compare multiple credit card offers based on your credit profile.
3. Read the Fine Print: Before signing a card agreement, read the Schumer box and fine print to understand how your interest rate is calculated and other details that may affect your APR.

If credit issues are preventing you from getting a competitive APR, consider improving your credit over the next six months to a year by making on-time payments and reducing your credit utilization.

The Bottom Line

Rising credit card interest rates can be frustrating. If possible, pay down your credit card debt or consider a debt consolidation loan, which typically has lower interest rates than credit cards. For any mortgage-related needs, call O1ne Mortgage at 213-732-3074. We’re here to help you make informed financial decisions.

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