Is 25 interest rate high?
This is one example of “bad APR,” as carrying a balance at a 25% APR can easily create a cycle of consumer debt if things go wrong and leave the cardholder worse off than when they started.
A 25.00% APR is a decent personal loan rate for people with bad credit. Applicants with a credit score of 580+ could qualify for a personal loan with a 25.00% APR if they choose the right lender and have enough income to afford the loan.
A 24.99% 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 24.99% APR is reasonable for personal loans and credit cards, however, particularly for people with below-average credit.
Avoid loans with APRs higher than 10% (if possible)
“That is, effectively, borrowing money at a lower rate than you're able to make on that money.”
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.
CALIFORNIA: The legal rate of interest is 10% for consumers; the general usury limit for non-consumers is more than 5% greater than the Federal Reserve Bank of San Francisco's rate.
In California, absent an exception which we discuss in depth below, the maximum allowable interest rate for consumer loans is 10% per year.
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.
Yes, a 24% APR is high for a credit card. While many credit cards offer a range of interest rates, you'll qualify for lower rates with a higher credit score. Improving your credit score is a simple path to getting lower rates on your credit card.
Your APR doesn't matter if you pay off your balance each month, thanks to your grace period. The Credit CARD Act of 2009 requires lenders to deliver your bill to you at least 21 days in advance of when it's due. During this time, most lenders offer an interest-free grace period.
Is it OK to buy when interest rates are high?
While no one wants to pay more than they should, mortgage interest rates are temporary and subject to change over time. So if you can afford the higher rate and want to buy a home now, feel free to do so — and just look for the opportunity to refinance in the future.
But while the Fed raised its benchmark rate fast in 2022–2023, it's expected to bring rates down at a much more gradual pace in 2024 and beyond. As a result, any mortgage rate improvements are also expected to be gradual.
In today's market, a good mortgage interest rate can fall in the high-6% range, depending on several factors, such as the type of mortgage, loan term, and individual financial circ*mstances. To understand what a favorable mortgage rate looks like for you, get quotes from a few different lenders and compare them.
Mortgage rates are currently expected to continue trending down through 2024 and into 2025. The Mortgage Bankers Association thinks that 30-year mortgage rates could fall to 5.6% in 2025.
| Credit Score | New Car Loan | Refinance Car Loan |
|---|---|---|
| 750 or higher | 12.77% | 7.89% |
| 700-749 | 12.65% | 8.98% |
| 600-699 | 17.84% | 10.09% |
| 451-599 | 22.56% | 12.76% |
| Product | Interest Rate | APR |
|---|---|---|
| 30-Year Fixed Rate | 6.91% | 6.95% |
| 20-Year Fixed Rate | 6.66% | 6.72% |
| 15-Year Fixed Rate | 6.36% | 6.43% |
| 10-Year Fixed Rate | 6.27% | 6.35% |
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 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.
The current highest credit card interest rate is 36% on the First PREMIER® Bank Mastercard Credit Card. The next highest credit card interest rate seems to be 35.99%, charged by the Total Visa® Card and the Milestone® Mastercard®.
However, the rate for consumer loans is capped at 12 percent unless they are “supervised loans,” which includes credit card debt, made by a “supervised lender.” These loans are capped at 36%.
Can I live off interest?
How much you need to live off interest depends entirely on your expenses and where the balance is invested. A million dollars in a retirement account might produce enough income for the median American to get by, but you'd need larger returns to cover a six-figure lifestyle. Consider your lifestyle goals, too.
An annual percentage rate (APR) of 24% indicates that if you carry a balance on a credit card for a full year, the balance will increase by approximately 24% due to accrued interest. For instance, if you maintain a $1,000 balance throughout the year, the interest accrued would amount to around $240.00.
Having a 700 credit score puts you in the “prime” category for borrowing. According to Experian, the average rates for this category are 6.44% for new-car loans and 9.06% for used-car loans.
| Credit score | Average APR, new car | Average APR, used car |
|---|---|---|
| Prime: 661-780. | 7.01%. | 9.73%. |
| Nonprime: 601-660. | 9.60%. | 14.12%. |
| Subprime: 501-600. | 12.28%. | 18.89%. |
| Deep subprime: 300-500. | 14.78%. | 21.55%. |
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.
