What is considered a bad interest rate?
Generally, what's considered a bad interest rate is anything higher than 10%. Ideally, you want to get an interest rate that's below 5% — but with little or bad credit, that can be harder to achieve.
A 20% APR is not good for mortgages, student loans, or auto loans, as it's far higher than what most borrowers should expect to pay and what most lenders will even offer. A 20% APR is reasonable for personal loans and credit cards, however, particularly for people with below-average credit.
A credit card APR below 10% is definitely good, but you may have to go to a local bank or credit union to find it. The Federal Reserve tracks credit card interest rates, and an APR below the average would also be considered good.
A good personal loan interest rate depends on your credit score: 740 and above: Below 8% (look for loans for excellent credit) 670 to 739: Around 14% (look for loans for good credit) 580 to 669: Around 18% (look for loans for fair credit)
According to Rachel Sanborn Lawrence, advisory services director and certified financial planner at Ellevest, you should feel OK about taking on purposeful debt that's below 10% APR, and even better if it's below 5% APR.
But depending on the lender, the borrower's credit score and financial situation and other factors, personal loan interest rates can generally range from under 6% to 36%—although higher interest rates aren't unheard of in states where it's allowed.
The APR you receive is based on your credit score – the higher your score, the lower your APR. A good APR is around 22%, which is the current average for credit cards. People with bad credit may only have options for higher APR credit cards around 30%. Some people with good credit may find cards with APR as low as 16%.
Key takeaways. Your credit card APR can go up if the prime rate changes, you paid your credit card bill late, your intro APR offer ended or your credit score dropped. If your APR increases, you can work on paying down your balance or transfer your balance to a card with a low or 0 percent intro APR offer.
Penalty APRs are part of why credit card overspending can be so dangerous, as they may reach higher than 29.99% when a payment is at least 60 days late. Interest rates this high would be unthinkable in most other common lending contexts.
No, a 26.99% APR is a high interest rate. Credit card interest rates are often based on your creditworthiness. If you're paying 26.99%, you should work on improving your credit score to qualify for a lower interest rate.
What is a too high-interest rate?
A high-interest loan charges interest and fees that are higher than most other loans. Typically, a loan with an annual percentage rate, or APR, over 36% is considered a high-interest loan. If you need cash fast or have low credit, you may be offered a high-interest loan or feel like you don't have any other options.
A high-interest loan is one with an annual percentage rate above 36% that can be tough to repay.
Mortgage rates are expected to decline later this year as the U.S. economy weakens, inflation slows and the Federal Reserve cuts interest rates. The 30-year fixed mortgage rate is expected to fall to the mid- to low-6% range through the end of 2024, potentially dipping into high-5% territory by early 2025.
So what's the magic number? In March, John Burns Research & Consulting found that 5.5% is the tipping point beyond which most consumers say they won't buy a home, and although rates have hovered between 6.5% and 7.5% since then, consumer attitudes haven't changed.
With some constitutional amendments, most notably the 1979 constitutional amendment, Article XV, Section 1, California's usury limit is now generally 10% per year with a broader range of exemptions.
The bottom line. Expert mortgage rate predictions vary somewhat, but the general consensus seems to be that there won't be dramatic decreases in the near future. That said, conditions can change, as recent predictions of rate cuts in early 2024 have not come to fruition.
Generally, what's considered a bad interest rate is anything higher than 10%. Ideally, you want to get an interest rate that's below 5% — but with little or bad credit, that can be harder to achieve. When applying for an auto loan, take some time to shop around to see who will give you the best rates.
"If you have a 30-year fixed rate ranging from 2.5 percent to 4.0 percent, you should hold on to the property for as long as you can," Herman explains. "If you have a mortgage rate higher than 4 percent, it may make sense to sell your home.
In today's automotive market, with prices and rates on the rise, a 2.9% APR is a good deal.
Average APRs
If you are going for more conventional finance such as a PCP deal, and your credit score is near perfect then you are likely to pay around 6% to 11% APR. If you are near-prime (basically meaning you have a good credit score, but it's not excellent) then expect to pay from 12% to 19%.
Is 3.5% a good APR?
The APR available to you will also depend on your credit. A low credit card APR for someone with excellent credit might be 12%, while a good APR for someone with so-so credit could be in the high teens. If “good” means best available, it will be around 12% for credit card debt and around 3.5% for a 30-year mortgage.
The average FICO credit score in the US is 717, according to the latest FICO data. The average VantageScore is 701 as of January 2024. Credit scores, which are like a grade for your borrowing history, fall in the range of 300 to 850. The higher your score, the better.
Is There a Maximum Credit Card APR? There is no federal law limiting the interest credit card companies can charge in general. Credit card interest rates are capped at 36% for active-duty military service members and their covered dependents under the Military Lending Act.
A good credit card APR is a rate that's at or below the national average, which currently sits above 20 percent. While there are credit cards with APRs below 10 percent, they are most often found at credit unions or small local banks. If you don't have good credit, you're likely to receive a higher credit card APR.
But Capital One's cards are more than hype — they include generous rewards cards as well as excellent products for business owners, students and those with average or poor credit. What won't you find on any Capital One card? Foreign transaction fees.
