What Is a Good Interest Rate on a Credit Card?

There are a variety of interest rates you can receive on a credit card. You always want to get the lowest rate possible when applying for a credit card, since you'll pay less in finance charges when you have a lower interest rate. When you get ready to apply for a credit card, it is best to do some comparison shopping to see which credit card company has the best interest rates.

Introductory Rate

The best rate you can receive is a zero percent promotional rate, which is an introductory rate for balance transfers and purchases. This rate will last for a specific period of time, such as six months or a year, and then convert to the standard rate.

Standard Rates

Some standard rates are calculated by taking the prime interest rate--the interest rate that banks give to their most creditworthy customers, usually around 3.25 percent--and adding 7.74 to 15.74 percent to it. A standard rate between 8 and 12 percent is generally considered good.

Balance Transfer

When a promotional rate expires, you may want to transfer the balance to another credit card company that offers a promotional rate. There could be a balance transfer fee involved.

Default Rate

If you payment is late, your promotional or introductory rate could be converted to a default rate, which can be as high as 29.99 percent.

Credit Limit

If your balance goes over the credit limit, your balance could be subject to the default rate as well. This process varies from bank to bank.