Experts: Should You Focus On Low APR or Rewards for Your Credit Card?

Shot of a young woman holding her credit card while using her cellphone at home.
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If you want to open a new credit card, you have no shortage of options available to you so it can be hard to tell which is the best choice. Credit card issuers will try to lure you in with appealing perks such as a low purchase APR or rewards — and Americans are pretty much split on which factor is more important when opening a credit card. According to a new GOBankingRates survey, 26% of Americans believe that a low purchase APR is the most important factor when opening a credit card while 22% favor rewards and cash back. But which perk is actually better?

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To find out, I chatted with a number of financial experts to get their insights on what they believe is most important. If you’re deciding between a low APR card or one that offers rewards, read on to see what these experts say is the more important perk.

Jaspreet Singh, Founder of The Minority Mindset: Rewards

“Low APR means nothing to me. I have no idea what my APR is for my credit cards because I never carry a balance. If you’re worried about APR, you shouldn’t use a credit card. Credit cards only have value if you pay off the entire balance each and every month. I look for the rewards. Personally, I prefer cash back.”

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Tori Dunlap, Founder of Her First 100K and Author of ‘Financial Feminist’: Rewards

“When it comes to credit cards, the best practice is to pay the entire balance every month. If you do this, then a higher APR won’t affect you because you’ll never be charged interest. If you are a responsible credit card holder, I recommend looking for a card with great rewards that will benefit your lifestyle. If you love to travel, consider a travel card, and if you’re shopping for a large family, maybe consider a card that earns points for grocery shopping. Many credit cards have great signing offers as well.”

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Andy Singh, Founder of SavingToInvest.com: It Depends

“[It] depends on your income. If [you are a] high-income [earner], go for rewards and sign-up promotions. If [you are a] lower-income [earner] and you are/expect to carry credit card debt, then focus on getting [the] lowest APY.”

Brynne Conroy, Author of ‘The Feminist Financial Handbook’: It Depends

“It would depend on your goals. If you are trying to pay off high-interest debt, a card with 0% APR on balance transfers could help you reach your goals faster if used responsibly. If you’re starting fresh and want to travel hack or use other rewards, those would be the metrics to look at — bearing in mind that you want to pay your bill off in full every statement cycle. That way, interest won’t offset the rewards you’re earning.”

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Derek Sall, Founder of LifeAndMyFinances.com: Rewards

“For those that pay off their credit card bills every month, don’t worry about the interest. Instead, focus on the big rewards points since you won’t ever be charged interest anyway. If you have trouble paying off your credit cards each month, you should be thinking about getting rid of your cards entirely — not worrying about APR.”

Tracie Forbes, Founder of Penny Pinchin Mom: It Depends

“Figuring out whether to focus on low APR or rewards for a credit card depends on your individual situation and spending habits. If you typically carry a balance on your credit card, then a low APR is often better financially than the value of the rewards. On the other hand, if you always pay your balance in full and on time, then rewards would be more valuable.”

Ted Jenkin, CFP, CEO of oXYGen Financial: It Depends

“Most APRs are variable, so the odds are that getting a low one would only be for an introductory period. For those people who can pay their bills every month, always look for the best cash-back or total rewards card. If you can’t pay your bills every month, look for the best low APR card or call your credit card company to work out an agreement.”

Sam Dogen, Founder of Financial Samurai: Rewards

“You should focus more on rewards! Why? Because you should always be paying off your credit card in full each month. Revolving credit card debt is terribly expensive and getting more expensive as interest rates go up. Take advantage of credit card rewards instead of letting credit cards take advantage of you.”

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Steve Chou, Founder of MyWifeQuitHerJob.com: It Depends

“If you travel frequently, a rewards card will almost always provide you with more lucrative benefits once you calculate the cost of airplane tickets and hotel stays. Low APRs are irrelevant as long as you pay off your card every month. If you plan on carrying a balance on your cards, a low APR is usually better.”

Bob Lotich, CEPF, Founder of SeedTime.com: Rewards

“My first rule with credit cards is to never carry a balance, therefore I never care what the APR is on a given credit card. I have earned over 100 free hotel nights over a five-year period just from my credit card rewards. For people who are consistently paying off their credit card each month, I recommend focusing on a card with great rewards.”

Julie Rains, Publisher of Investing To Thrive: It Depends

“I prefer focusing on credit card rewards and letting the high APR scare me into paying off my credit card balance every month — before any interest is charged. If you think you may carry a balance, though, you may want to focus more on low APR. Interest charges can easily surpass credit card rewards.”

Stephanie Taylor Christensen, Personal Finance Writer: It Depends

“If you know for certain that you’ll always pay your balance in full by the payment due date, focus on rewards — the APR will be irrelevant. If you aren’t certain about your financial security or ability to manage your balance, focus on the low APR. If you find yourself with less income due to job loss or similar, the low APR will ultimately prove more valuable — even if only for financial peace of mind.”

Dave Leto, Founder of 50PlusFinance.com: Low APR

“Focus on a low APR instead of rewards. If you want to pay down your debt, a low APR will allow more money to go to the principal and help you pay off debt sooner. Rewards only come if you continue to spend on your credit cards. Don’t be fooled by your credit card company.”

Lulu Gal, Founder of Lulu. Gal Jewelry: Rewards

“I recommend going with the rewards if I had to choose between the two. Cards with low APR will help those who tend to keep a balance on their cards (even though we should pay off cards in full!). Cards with rewards give you something for making everyday purchases. The reason is that if you are using your card the right way, you should never carry a balance and therefore never [have to pay] interest, so the APR becomes irrelevant. Choosing the rewards that best fit your personal needs will make more sense to you. If you do not travel a lot then miles may not be a good fit for you. Choosing a card that has rotating categories may not be the best fit for you if you do not spend a lot in the high category ever. In that scenario, a fixed reward system may be better. It all comes down to choosing the one that makes the most sense based on how you shop.”

Martin Dasko, Founder of Studenomics: Rewards

“If you don’t carry a balance, you should focus on credit card rewards so that you have a card that helps you maximize your lifestyle. If you get the right credit card rewards, you’ll get perks for just paying your bills.”

Kris Phelps, Wealth Artisan: It Depends

“If you’re someone who often carries a balance you are better served by a lower APR. The interest you pay will offset any advantage gained from better rewards. If you’re disciplined and pay off your balance monthly, then go for the better rewards, all day long.”

Brian, Founder of Lazy Man and Money: It Depends

“The focus on the credit card interest rate or rewards points depends on whether you have the money to pay off your credit card every month. If you do, set up automatic payments and collect the reward points. If you do not have the money to pay it off in full and carry a balance each month, a low APR is much more important.”

Len Penzo, Founder of Len Penzo dot Com: It Depends

“That’s a question that depends on your level of financial discipline. If you’re the type who pays off their credit card in full every month, then it makes sense to get a rewards credit card because the interest rate becomes a moot point. On the other hand, if you have trouble controlling your spending and are likely to carry a credit card balance from month to month, then it is imperative that you focus on finding a credit card that offers the most favorable interest rate.”

Paul Vachon, Founder of The Frugal Toad: It Depends

“I prefer rewards since I don’t carry balances on my credit cards. Lower interest rates would benefit someone who carries a balance on their credit card by lowering overall debt payments over time.”

Joe Udo, Founder of Retire by 40: Rewards

“When shopping for a new credit card, people who are on top of their personal finance should focus on the sign-up bonus. Many cards provide lucrative cash or reward point bonuses. This is the best bang for your buck if you pay off the monthly balances. However, you need to be aware of the minimum spending requirements. If you can meet that, then go for it!”

Andrew Schrage, Founder of Money Crashers: Rewards

“We advise people not to carry credit card balances from month to month if at all possible, so we generally recommend rewards credit cards over credit cards with lower regular APRs.

There is an important exception to this recommendation. Many rewards credit cards — especially cash-back credit cards — have long 0% intro APR periods that appeal to new cardholders who need to transfer existing high-interest balances or finance large purchases that they can’t pay off in a single month. As long as you pay off your entire balance before the intro period ends, you can earn rewards on these cards without paying interest on carried balances. But if you don’t pay off your entire carried balance by the end of the intro period, you could be liable for deferred interest. This is the interest that you would have paid on the carried balance, charged at the regular rate — usually 15% APR or higher.

If you think you’ll be tempted to charge more than you can afford during the intro period, avoid the temptation of 0% APR credit cards and choose a basic rewards credit card instead. Charge only what you can pay off in full and treat the cards like cash.”

Patrice Washington, Financial Coach and Star of ‘Opportunity Knock$’: Low APR

“The real question is, what reward is worth carrying credit card debt? The greatest reward is financial freedom. Always choose the lowest APR unless you are one of the few Americans that can pay your card off completely every month. When those people examine rewards, the APR doesn’t matter. They don’t pay interest.”

Jason Steele, Founder of CardCon: It Depends

“Those who avoid interest by paying their balances in full each month should focus on rewards. Those who carry a balance should look for the lowest APR.”

Todd Tresidder, Financial Coach at FinancialMentor.Com: It Depends

“It depends on two things: how you use your cards and your goal with the cards. If you pay your cards off every month, then the APR doesn’t matter so the decision is easy — rewards all the way. However, if you carry a balance — [which is] not recommended — then the issue is more complex. You must look at the costs and benefits of each offer to decide what is optimal. Usually, the interest cost will exceed the value of the card benefits when carrying a balance.”

Simon Zhen, Chief Research Analyst and Editorial Director at MyBankTracker.com: It Depends

“The choice between a credit card with a low interest rate and a credit card with rewards will depend solely on your ability to pay off the entire card balance every month on a consistent basis. If you carry a card balance from month to month, you’re paying interest charges that likely negate the value gained from any earned rewards. In this case, you’d rather opt for a low APR credit card to minimize interest charges.”

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Gabrielle Olya contributed to the reporting for this article.

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About the Author

With eight years of experience working in the personal finance space at GOBankingRates, Jaime Catmull has amassed an extensive network of financial influencers and experts. Now, she’s tapping that network to get the real scoop on how you can live your best financial life and increase your wealth.
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