Skip to content

Are you paying enough attention to your credit card's APR?

April 10, 2021
4 min read
This post contains references to products from one or more of our advertisers. We may receive compensation when you click on links to those products. Terms apply to the offers listed on this page. For an explanation of our Advertising Policy, visit this page.

Editor’s note: This post has been updated with new information.


The No. 1 rule for a winning credit card rewards strategy has nothing to do with comparing sign-up bonus offers or maximizing redemption value from your points. Instead, it’s much simpler: Pay your balance in full every month.

Want more credit card news and advice from TPG? Sign up for our daily newsletter!

Sign up for our daily newsletter

As simple as that guiding principle sounds, it can be much more challenging to follow it. The average household credit card debt in 2020 was $5,315, according to data from Experian. Owing debt can negate the value of any points or cash back earned, particularly in today’s environment where credit card interest rates are setting record highs.

Related: How to earn points and miles with fair to poor credit

In this guide, we’ll provide some helpful tips on what to look out for when it comes to your credit card’s annual percentage rate.

Keep tabs on your APR

The bank that issued your credit cards can change your interest rate at any time, and you won't receive a notification about it. For example, the rate on my Chase Sapphire Preferred Card card increased by 0.5% at some point in the past three months.

I've received plenty of emails from the bank on how to use my rewards points and why I should use its mobile payment system, but I haven't received any reminders to monitor my APR. It makes sense, of course; banks aren't looking for opportunities to call attention to the fact that you might have to pay them more money.

Getting a lower interest rate

(Photo by Shutterstock)

If you’re happy with your existing card and you’ve been a loyal, low-risk customer, you may want to give your issuer a call. A CreditCards.com survey of more than 1,500 cardholders revealed that 56% of people who asked for lower interest rates had their requests approved.

Rather than simply asking for better terms, I recommend reviewing some of the preapproved offers you receive in the mail. Consider the APR ranges for your card — if the offer starts at a lower interest rate, be sure to mention it to the customer service representative. Just as airlines and hotels are willing to match elite status to appeal to customers, banks and card issuers may be willing to budge to retain customers.

However, if you’ve been carrying debt on your card from month to month, you may not have luck asking for a lower interest rate. Plus, knocking down your interest rate a couple of percentage points won’t make much of a difference. Instead, you should consider looking at a card with a balance transfer offer to move your debt to a card with an attractive 0% intro interest rate.

Related: 5 tips to make a successful balance transfer

While you’ll likely pay a balance transfer fee between 3% and 5% of the transferred amount, there are some notable exceptions. Even if you do pay a balance transfer fee, that initial chunk of cash can be worth it. Create a plan to attack and pay down your debt in the interest-free introductory period, and you can come out ahead of paying monthly finance charges.

Related: 6 simple rules to stay out of credit card debt

Bottom line

Before you get wrapped up in the world of points and miles, you’ll want to backtrack to the basics. If you’ve been carrying a balance while trying to collect rewards points, it’s time to shift your focus to locking in a lower interest rate, paying off your debt, improving your credit score and starting anew. It’s best to keep up with your credit card’s APR periodically so you won’t be hit with any surprises in the future.

Related: TPG’s 10 commandments of credit cards

Additional reporting by David McMullin.

Featured image by Getty Images/Hero Images
Editorial disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airline or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

TPG featured card

Best starter travel card
TPG Editor‘s Rating
Card Rating is based on the opinion of TPG‘s editors and is not influenced by the card issuer.
4 / 5
Go to review

Rewards

1 - 3X points
3XEarn 3 Points per $1 spent at Restaurants and Supermarkets
3XEarn 3 Points per $1 spent at Gas Stations, Air Travel and Hotels
1XEarn 1 Point per $1 spent on all other purchases

Intro offer

Earn 80,000 ThankYou® points60,000 points
For a limited time, earn 80,000 bonus ThankYou® Points after you spend $4,000 in purchases within the first 3 months of account opening

Annual Fee

$95

Recommended Credit

670-850
Excellent, Good
Credit ranges are a variation of FICO© Score 8, one of many types of credit scores lenders may use when considering your credit card application.

Why We Chose It

The Citi Premier’s 3 points per dollar spent across a wide range of popular categories is one of the more lucrative offerings in the world of points and miles. The Citi Premier comes with a $95 annual fee and is currently offering a solid sign up bonus of 80,000 points after you spend $4,000 on purchases within the first three months. It also has some valuable transfer partners to make the most of your rewards. Add in access to Citi Entertainment plus a $100 hotel credit for any single-stay hotel booking that exceeds $500 or more, excluding taxes and fees, booked through the Citi travel website, there are few reasons why the Citi Premier should not be in every traveler’s wallet.

Pros

  • Earns 3x points on restaurants, supermarkets, gas stations, air travel and hotels.
  • $100 annual hotel savings benefit (on single hotel stay bookings of $500 or more, excluding taxes and fees, booked through thankyou.com)
  • Points transfer to 16 airline programs, from JetBlue to Virgin Atlantic.
  • World Elite Mastercard benefits, extended warranty, damage and theft protection.

Cons

  • $95 annual fee
  • Lacks travel protections that other travel rewards cards come with
  • For a limited time, earn 80,000 bonus ThankYou® Points after you spend $4,000 in purchases within the first 3 months of account opening
  • Earn 3 Points per $1 spent at Restaurants and Supermarkets
  • Earn 3 Points per $1 spent at Gas Stations, Air Travel and Hotels
  • Earn 1 Point per $1 spent on all other purchases
  • Annual Hotel Savings Benefit
  • 80,000 Points are redeemable for $800 in gift cards when redeemed at thankyou.com
  • No expiration and no limit to the amount of points you can earn with this card
  • No Foreign Transaction Fees on purchases
Best starter travel card
TPG Editor‘s Rating
Card Rating is based on the opinion of TPG‘s editors and is not influenced by the card issuer.
4 / 5
Go to review

Rewards Rate

3XEarn 3 Points per $1 spent at Restaurants and Supermarkets
3XEarn 3 Points per $1 spent at Gas Stations, Air Travel and Hotels
1XEarn 1 Point per $1 spent on all other purchases
  • Intro Offer
    For a limited time, earn 80,000 bonus ThankYou® Points after you spend $4,000 in purchases within the first 3 months of account opening

    Earn 80,000 ThankYou® points
    60,000 points
  • Annual Fee

    $95
  • Recommended Credit
    Credit ranges are a variation of FICO© Score 8, one of many types of credit scores lenders may use when considering your credit card application.

    670-850
    Excellent, Good

Why We Chose It

The Citi Premier’s 3 points per dollar spent across a wide range of popular categories is one of the more lucrative offerings in the world of points and miles. The Citi Premier comes with a $95 annual fee and is currently offering a solid sign up bonus of 80,000 points after you spend $4,000 on purchases within the first three months. It also has some valuable transfer partners to make the most of your rewards. Add in access to Citi Entertainment plus a $100 hotel credit for any single-stay hotel booking that exceeds $500 or more, excluding taxes and fees, booked through the Citi travel website, there are few reasons why the Citi Premier should not be in every traveler’s wallet.

Pros

  • Earns 3x points on restaurants, supermarkets, gas stations, air travel and hotels.
  • $100 annual hotel savings benefit (on single hotel stay bookings of $500 or more, excluding taxes and fees, booked through thankyou.com)
  • Points transfer to 16 airline programs, from JetBlue to Virgin Atlantic.
  • World Elite Mastercard benefits, extended warranty, damage and theft protection.

Cons

  • $95 annual fee
  • Lacks travel protections that other travel rewards cards come with
  • For a limited time, earn 80,000 bonus ThankYou® Points after you spend $4,000 in purchases within the first 3 months of account opening
  • Earn 3 Points per $1 spent at Restaurants and Supermarkets
  • Earn 3 Points per $1 spent at Gas Stations, Air Travel and Hotels
  • Earn 1 Point per $1 spent on all other purchases
  • Annual Hotel Savings Benefit
  • 80,000 Points are redeemable for $800 in gift cards when redeemed at thankyou.com
  • No expiration and no limit to the amount of points you can earn with this card
  • No Foreign Transaction Fees on purchases