credit card APRWhile this information was accurate at the time this post was published, these cards’ offers and perks may have expired or changed over time. Visit our reviews of the best credit cards to find the right card for your needs.

There are a lot of perks and benefits to owning a credit card, which can include the ability to earn cash back, travel miles and points to exchange for gift cards and goods, as well as allow you to make a big-ticket purchase without having all the cash upfront at the time of purchase. Even with all of their perks, credit cards also have many factors that people need to consider before signing up — and APR is one of the most important of those factors. Unfortunately, an awful lot of people don’t know their credit card APR, as we discovered in a recent survey we conducted. Of the 504 men and women ages 18 to 29 we surveyed, nearly 40% didn’t know their exact credit card APR. Even more worrisome, 57% of those respondents admitted to carrying a balance on one or more credit cards, which means they don’t know what they’re paying on those balances. And millennials are likely not the only ones who find themselves in such situations. Keep reading to find out everything you need to know about your credit card APR and why it matters.

What is credit card APR?

APR stands for annual percentage rate, and it’s essentially the yearly percentage rate you will pay if you carry a balance on your credit card. However, it’s important to note that this interest is usually compounded on a daily basis, so if you owe money on your credit card and don’t pay it off by the end of each billing cycle, you’ll be charged interest on that balance. APR also applies to balance transfers, cash advances and sometimes delinquent payments. It is possible for your credit card to have several different APRs, which might be difficult to grasp, but it’s easier if you understand what they’re for.

Purchase APR is the rate you’ll most often see advertised, as it’s the APR applied to all purchases you make using your credit card. If your card offers a 0% intro purchase APR, it means that you’ll pay no interest on any purchases you make within the set time frame.

Balance transfer APR is the rate applied to any money transferred from an old credit card to a new card. Sometimes your balance transfer and purchase APR are similar, while other times they’re quite different. Also, if your card offers a 0% intro balance transfer APR, it means that you will not pay interest on any balance you transfer within the set time frame.

Cash advance APR is charged for money you take out from an ATM using your credit card or any cash you get from using a credit card convenience check, which are the blank checks your credit card provider mails periodically to encourage you to get a cash advance.

Penalty APR applies to credit cards that are delinquent on payments (generally more than 60 days late). This APR is typically much higher than your existing purchase or balance transfer APR, and it will be applied to all of your current balances.

Some cards offer a special introductory period when you first open your account that gives you a 0% APR on purchases and/or balance transfers for a certain number of months. It’s important to pay attention to the APRs offered after the 0% intro period ends, because you don’t want to get stuck paying outrageously high interest later down the road if you’re carrying a balance.

How is your APR determined?

It’s important to understand that the advertised APR range you see when you apply for a credit card is the range that your APR will fall into — but you aren’t guaranteed a specific rate. The actual rate you receive once your application is accepted will be determined by an evaluation of your credit by the credit card provider. A good rule of thumb is that the better your credit, the more likely you will be to receive a rate on the lower end of the APR range you see, while those with less-than-stellar credit can expect a higher rate.

Why it’s important to know — and understand — your APR

Credit card companies determine the APR for your card based on your creditworthiness, using your credit scores. Generally, when looking at an offer for a credit card, you’ll notice a range of APRs — for example, 13.24% to 23.24%. You’ll often see the word “variable” after this range of rates; this means the APR you’ll be given will change over time. A fixed APR, something that’s not as common with credit cards, on the other hand, will remain the same as when you first open the card. Understanding the difference, as well as realizing that the higher your credit scores, the lower your APR will (generally) be, is key to not getting in over your head when it comes to credit card interest since it’s what you’ll have to pay if you ever carry a balance on a credit card.

Is it possible to lower your APR?

Sometimes, people do get in over their head with credit card interest. Fortunately, you can get ahead of the curve and give yourself time to catch up on your balance. One of the best ways to do this is to apply for a new credit card with a long 0% intro APR period and perform a balance transfer. This helps you immediately stop paying interest on that balance, which saves you money, and buys you time to pay off the balance — just be sure to keep in mind that most cards charge a balance transfer fee of 3% to 5% of the total amount transferred.

Another thing you can try is to call your credit card provider and negotiate a reduction in your APR. This is a good idea for people who have gotten into a better financial situation since opening their credit card account, like a higher annual income, and want an APR that reflects that. According to Bankrate, it’s a good idea to try and negotiate a reduction in your credit card interest rate every two years — this is obviously going to be much easier if you’ve got longstanding good credit, a strong track record of paying that card on time or can show that your credit has improved.

Which card should I choose?

There are tons of credit cards to pick from, which means no matter what you’re looking for, you can probably find it. Here are a few of our top picks for those looking for a credit card with certain APR characteristics.

Best for low ongoing APR: Citi Diamond Preferred Card

Not only does the Citi Diamond Preferred Credit Card (a NextAdvisor Advertiser) offer a stellar 21-month 0% intro APR on balance transfers made within the first 4 months and a 12-month 0% intro APR on purchases, but its ongoing APR after the introductory period ends is one of the best out there — visit our Citi Diamond Preferred Credit Card review to see the current rates. This card does charge a balance transfer fee of $5 or 5% on each transfer (whichever is greater), but there is no annual fee to worry about. Additionally, cardholders can choose their own payment due date, making it easy to align your credit card payments with your paycheck, which can go a long way toward ensuring that you are always able to pay off your card in full each month. There is a foreign transaction fee of 3% on each charge, so keep that in mind if you travel abroad often.

Best 0% intro APR credit card: Citi Simplicity Card – No Late Fees Ever

A combination of a long 18-month 0% intro APR period as well as no late fees or annual fee makes the Citi Simplicity Card – No Late Fees Ever a top-notch choice. Although the ongoing APR on purchases and balance transfers when the introductory period ends isn’t nearly as low as the Citi Diamond Preferred, it’s still decent — visit our Citi Simplicity Card – No Late Fees Ever review to see the current rates. There is a $5 or 5% fee on each balance transfer, as well as 3% foreign transaction fees with this card, but if you’re looking for a long 0% intro APR, 18 months is pretty good.

Best for people with average credit: Discover it

Still working on building up your credit? Unlike the cards detailed above that require good or excellent credit for approval, Discover has you covered with two top-notch credit card choices for those with average to excellent credit (usually a credit score of 670 or higher), depending on whether you plan to transfer a balance or just want a great card with a 0% intro APR period followed by a low ongoing APR. In fact, these credit cards have benefits usually reserved for those with great credit and they are also two of our top-rated cards for those with excellent credit.

Discover it Balance Transfer is a card that is great for anyone with average to excellent credit. It offers 18 months of 0% intro APR on balance transfers, as well as 0% intro APR on purchases for 6 months. There is a 3% balance transfer fee to keep in mind, but no annual or foreign transaction fees to worry about. Additionally, this card allows you to earn 5% cash back on rotating categories every quarter you activate (up to quarterly maximum, currently $1,500, then it’s 1%) as well as a unlimited 1% cash back on all other purchases. As an added bonus, all the cash back you earn within your first year of card ownership will be automatically doubled at the end of the year — meaning, if you earn $400 in cash back, Discover will double it to $800.

If you have average to excellent credit and would like a longer 0% intro APR on purchases, the Discover it Cash Back might be more up your alley, as it offers a 14-month 0% intro APR on purchases and balance transfers (with a 3% balance transfer fee). This card shares the same cash back earnings as the Discover it Balance Transfer credit card, including 5% cash back on rotating categories every quarter you activate (up to quarterly maximum, currently $1,500, then it’s 1%), unlimited 1% on all other purchases and the double cash back offer for your first year. There is also no annual fee or foreign transaction fees, making this a great credit card for those who like to travel. And if you want to keep an eye on your credit, both of these Discover cards provide free TransUnion FICO credit scores with your monthly statements so you can chart your progress over time.

These are only a few of the great cards available, so if you’d like to see what else is out there, head to our credit card reviews.

Disclaimer: This content is not provided or commissioned by the credit card issuer. Opinions expressed here are author’s alone, not those of the credit card issuer, and have not been reviewed, approved or otherwise endorsed by the credit card issuer. This content was accurate at the time of this post, but card terms and conditions may change at any time. This site may be compensated through the credit card issuer Affiliate Program.