A 5% APR is good for pretty much all types of borrowing, except for mortgages. On personal loans, credit cards, student loans, and auto loans, 5% is much cheaper than the average rate. You probably won’t be able to get a rate this low unless you have excellent credit, though – and it’s unlikely to even be offered in the case of credit cards.
5% Is a Good APR For:
Credit cards
A 5% APR is very good for a credit card. You’re unlikely to find an ongoing rate this low, though. The average credit card APR is 22.89%.
Personal loans
A 5% APR is very good for a personal loan. APRs on personal loans tend to range from around 4% to 36%.
Auto loans
A 5% APR is very good for auto loans. APRs on auto loans tend to range from around 4% to 10%, depending on whether you buy new or used.
5% Is NOT a Good APR For:
Mortgages
A 5% APR is not great for a mortgage. The average 30-year fixed mortgage rate is around 3%.
Student loans
A 5% APR is not great for federal student loans, which tend to have rates from around 3% to 5%. It’s decent for private student loans, whose rates range from 1% to 12%.
This answer was last updated on 03/26/24 and it was first published on 05/13/21. For the most current information about a financial product, you should always check and confirm accuracy with the offering financial institution. Editorial and user-generated content is not provided, reviewed or endorsed by any company.
FAQs
Avoid loans with APRs higher than 10% (if possible)
According to Rachel Sanborn Lawrence, advisory services director and certified financial planner at Ellevest, you should feel OK about taking on purposeful debt that's below 10% APR, and even better if it's below 5% APR.
Is a 5% interest rate good? ›
A high-yield savings account that pays 5% interest is highly competitive. Not only does it significantly outpace the average savings account interest rate, but it's on the high end of the scale even for high-yield savings products.
What does 5 percent APR mean? ›
Annual percentage rate (APR) refers to the yearly interest generated by a sum that's charged to borrowers or paid to investors. APR is expressed as a percentage that represents the actual yearly cost of funds over the term of a loan or income earned on an investment.
What percent APR is good? ›
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.
Is 5% on a car loan good? ›
A 72-month loan for a car is a long-term loan, and long-term loans typically come with higher interest. While long-term loans translate to lower monthly payments, they result in more interest paid over the life of the loan. With that said, an interest rate of around 5% for a 72-month auto loan is considered ideal.
Why is my APR so high with good credit? ›
Factors that increase your APR may include federal rate increases or a drop in your credit score. By identifying changes to your APR and understanding the actions that led to your increased rate, you can take steps that may help reduce your interest charges in the future.
Is 5% good for a savings account? ›
Key takeaways. The top high-yield savings accounts are currently earning APYs of 5 percent and greater. By comparison, the national average savings account APY is just 0.59 percent. You'll often find the most competitive APYs at online-only banks, which tend to pay higher rates than brick-and-mortar banks.
What does 5% interest rate mean? ›
An interest rate tells you how high the cost of borrowing is, or high the rewards are for saving. So, if you're a borrower, the interest rate is the amount you are charged for borrowing money, shown as a percentage of the total amount of the loan.
Is a 5% yield good? ›
Generally, 5% and above is considered a good rental yield. Anything under this, such as 3%, and you'll struggle to make any real returns on your investment.
What is 5% APR on $20000? ›
For instance, using our loan calculator, if you buy a $20,000 vehicle at 5% APR for 60 months the monthly payment would be $377.42 and you would pay $2,645.48 in interest.
5% as a decimal is 0.05 per year. 0.05/12 = 0.00417 per month.
Is 5.9 percent APR good? ›
On a 36-month loan, 5.9% APR with above-average credit is a bad rate. If you see a rate this high with captive financing, it could be because it's for a longer-term loan.
Is 5% APR for house good? ›
Mortgages. A 5% APR is not great for a mortgage. The average 30-year fixed mortgage rate is around 3%.
Is 6% APR good or bad? ›
It depends on the type of card you're looking at, as well as your own credit. A credit card APR below 10% is definitely good, but you may have to go to a local bank or credit union to find it. The Federal Reserve tracks credit card interest rates, and an APR below the average would also be considered good.
What is a bad APR? ›
Anything below the average credit card interest rate — 24.71% for new offers, as of May 2024, according to a LendingTree study — is generally considered a good APR, and anything above that rate is considered high.
Is 5 APR good for a used car? ›
Car Loan APRs by Credit Score
Excellent (750 - 850): 2.96 percent for new, 3.68 percent for used. Good (700 - 749): 4.03 percent for new, 5.53 percent for used. Fair (650 - 699): 6.75 percent for new, 10.33 percent for used. Poor (450 - 649): 12.84 percent for new, 20.43 percent for used.
Is 5 APR good for savings accounts? ›
Key takeaways. The top high-yield savings accounts are currently earning APYs of 5 percent and greater. By comparison, the national average savings account APY is just 0.59 percent. You'll often find the most competitive APYs at online-only banks, which tend to pay higher rates than brick-and-mortar banks.
Do you pay APR if you pay on time? ›
The bottom line on APR
Remember that APR is only applied if you're carrying an outstanding balance on your card. You can typically avoid paying any interest charges if you pay off your card balance before the statement period ends each month. Selecting the right credit card shouldn't be complicated.
