Do You Know Your Credit Card’s Interest Rate?

by on November 13th, 2012

To be honest, until last week, I didn’t know the interest rate on my credit card. (FYI – I tend to use a single credit card for 99 percent of my expenses; it’s a card with a good rewards program, and I pay the bill off in full every month.) Then my issuer sent me a letter in the mail, letting me know of some changes. Tell me what you think.

The Terms

The new terms for my credit card apply only to purchases – so that’s what we’re going to focus on here. (And, to be honest again, I don’t know what the interest rate is for a balance transfer or cash advance!) The APR – Annual Percentage Rates, for you newbies – is prime + 10.74%. Since the prime rate is variable, it puts it at 13.99% today, although obviously that could change.

Is This A Good Interest Rate?

According to a March 2012 article on MainStreet, the average APR across the credit card industry is around 15%. When I read this, I was surprised. Why? Because I have a good credit score. No, scratch that, I have a great credit score. It’s hovered around the 800 mark for as long as I’ve kept track of it. Knowing that, I figured I’d qualify for the absolute lowest interest rate on my credit card.

Why My Interest Rate Is So High

I suppose it was indignation at learning that my above-average credit score had earned me only a barely below-average interest rate that caused me to call my credit card provider to ask for a rate reduction. I was surprised when they told me they couldn’t do it.

The reason?

Apparently, my credit limit is abnormally high based on my reported income. I have to admit, it is. Because my husband and I use this account to earn cashback, we use the card for everything – and we reap the rewards.

And that’s when I remembered…

A few months ago, I cancelled another credit card – one I never used – and asked to increase the credit limit on this card to offset the hit to my credit score. They were hesitant to do it, until I laid out my big bargaining chip. I told them they could increase my interest rate as high as they wanted. Why? Because I never, ever incur those interest charges in the first place, because I never, ever make a late payment.

So I guess I’m ok with my ultra-high APR, knowing I’ll never have to face its consequences.

Reader, do you know your credit card’s APR? Is it higher or lower than mine? Have you ever tried to change it?

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