How to get a lower APR on a credit card

APR refers to the total cost of borrowing. You can use this to compare the cost of different financial products like credit cards and loans. Bear in mind that APR excludes introductory rates, balance transfer fees and cash withdrawal fees.

6 min read
Woman looking at credit card bill

“The lower the APR, the less interest you will pay. This usually means you should be able to clear your credit card balance sooner. “

The best rates are usually reserved for those with the highest credit scores. But you can avoid interest altogether, regardless of the APR, if you pay your credit card balance in full, on time, every time.

But perhaps you’re not in a position to pay off your balance in one go? With this in mind, we’ve got some tips on how to improve the chances of getting a lower APR when you apply for a credit card.

Find out more about APR in our Ocean Finance guide.

1. Improve your credit score 

The APR rate lenders offer you depends on several factors, including the lender’s criteria and your credit history. Generally speaking, the better your credit score, the more likely lenders will offer you a lower APR. Conversely, the lower your credit score, the higher the APR will likely be. So it’s best to make sure your credit file is in good shape. 

Before you apply for a credit card, make sure you check your credit file for any errors. Simply updating old information can boost your credit score. You can also use your report to identify any other areas that need improving. 

Another simple way to improve your credit score is to register to vote (if you haven’t done so already). You can check the Government's website to find out if you’re eligible to register. You’ll need your National Insurance number to hand. 

You can increase your score further by maintaining your repayments towards your credit card, on time, every time. Any missed payments will stay on your credit file for six years, so consider setting up a direct debit for at least the minimum amount. That way, you’ll never miss a payment again (as long as you have the funds in your bank account to cover it). This will also show lenders that you are a responsible borrower. 

In addition, you should aim to reduce your credit utilisation rate. This is your total outstanding balance compared to your total credit limit. Ideally, you want to spend no more than 30% of your credit limit (). Spending more than 30% of your credit limit could give lenders the impression that you are in financial difficulty. This could put them off accepting future credit applications, in case you cannot afford to repay them. 

For more tips on how to improve your score, read our article ‘12-week plan to a better credit score’. 

2. Shop around 

Before you commit to a credit card, do your homework and shop around to find the most suitable credit card for you. Try and find a card with the lowest available APR, but there are other things to factor in as well. A card with the lowest APR doesn’t always mean it’s the most appropriate credit card for you.

For example, check if there are any balance transfer fees and cash withdrawals fees on top. Also, be aware that APR doesn’t include late payment charges or any fees for exceeding your credit limit or returned payments. You also need to consider how long any introductory period lasts.

If you find a card with incentives (such as travel insurance and cashback), weigh up the rewards and decide if you will benefit from them. They sometimes come with extra costs.

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3. Use an eligibility checker 

Anything that reduces your credit score can increase the APR that lenders offer you. Every time you make a credit application, the lender will perform a hard check on your credit file to check your suitability. This leaves a marker on your file, which other lenders can see. 

If you are rejected or you make too many applications in a short space of time, it could reduce your credit score and give lenders the impression that you are in financial difficulty. In turn, this could put them off lending to you, in case you can’t afford to repay them. 

So before you apply for a credit card, it’s best to use an eligibility checker like QuickCheck. This will give you an idea of whether you’re likely to be accepted for a credit card. That way, you’ll be less likely to apply for a card if there’s a high chance of getting rejected, which can affect your credit score. 

Unlike a formal application, using an eligibility checker won’t impact your credit score, as it only performs a soft search. Also, if the eligibility checker does show that the lender is likely to reject your application, you can always find ways to improve your credit report. Once your credit score increases, you should then be able to access better interest rates. 

4. Transfer to a low interest or 0% card 

You could think about doing a balance transfer. To do this, you’d need to open a separate card and then transfer your credit card balances onto it. This could be worth doing if you are offered a lower interest rate or a 0% introductory offer by a different provider. 

Bear in mind that transfer fees may apply. And remember not to make any cash withdrawals using your card. Otherwise, interest and fees can apply - even if you are within your introductory offer period. Introductory offers can also be removed if you fail to meet repayments - so you’ll begin paying at the standard interest rate which could be much higher. 

Also bear in mind that interest will apply at the standard interest rate after the introductory offer has finished. So it’s prudent to pay more than the minimum amount so you clear the balance before the offer ends. Whether you are accepted for a lower rate or for a new card depends on the individual lender’s criteria.

Disclaimer: All information and links are correct at the time of publishing.

Adele Kitchen, Personal Finance Writer

Adele Kitchen

Personal Finance Writer

Adele is a personal finance writer with more than 10 years in the finance industry behind her. She writes clear and engaging guides on all things loans for Ocean, as well as contributing blogs to help people understand their options when it comes to money.