Average Credit Card Interest Rate Is 20.45%

Online credit card market cools off as 2021 wraps up

person with striped long-sleeved shirt holding a credit card
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The average credit card interest rate is now 20.45%, according to data collected by The Balance.

The online credit card marketplace was quiet in November compared to prior months. The Balance recorded only a handful of small pricing updates. The mean annual percentage rate (APR) is still higher than it was when 2021 began, but now a smidge below its recent post-2020 peak. 

Key Takeaways

  • The average APR on credit card purchases is currently 20.45%, which is one of the highest monthly averages recorded in 2021 but still below the pre-pandemic series peak of 21.30%.
  • Store credit cards have the highest average interest rate: 24.28%
  • Business credit cards have the lowest average interest rate: 17.30%
  • Cash-back rewards cards have the lowest average interest rate among consumer cards: 19.31%

Average Credit Card Interest Rates (APRs) on Purchases by Card Category

Card type is just one factor that influences a credit card’s interest rate. To learn how The Balance categorizes card types, see the “Methodology” section at the bottom of this report. Other determining factors include your credit standing and the type of transaction your card is used for (more on that later in the “Average Interest Rates by Credit Card Transaction Type” section below).

Average Credit Card Interest Rates Based on Card Type
  Average APR 1 Month Ago 6 Months Ago 1 Year Ago
All Credit Cards 20.45% 20.46% 20.28% 20.24%
Business Credit Cards 17.30% 17.30% 17.57% 17.81%
Student Credit Cards 20.02% 20.02% 18.83% 18.83%
Cash-Back Credit Cards 19.31% 19.31% 19.24% 19.09%
Travel Rewards Credit Cards 19.32% 19.31% 19.30% 19.21%
Secured Credit Cards 20.74% 20.74% 20.55% 20.14%
Other 22.17% 22.26% 22.18% 22.39%
Store Credit Cards 24.28% 24.28% 24.30% 24.24%

A credit card often has a range of APRs, such as 17.99% to 25.99%. The better your credit score, the more likely you are to get approved for an interest rate on the lower end of the range.

What’s Behind Recent Interest Rate Changes?

After a quiet 2020, activity in the credit card market really picked up in 2021. The Balance observed an array of online 0% APR offer changes and new card debuts before winter set in, such as the Wells Fargo Reflect Card. Between new card additions to our data pool and pricing term updates, the average credit card interest hit the highest point recorded in 2021 in October.

November was quieter, and small online offer adjustments for new cardholders were the driving force behind the latest (and minor) average rate change. The Balance recorded interest rate updates for seven online credit card offers in November 2021, most of which were not substantial enough to move the average interest rate needle. 

A couple of cards, such as the FNBO Evergreen Rewards Visa Card and the Milestone Gold Mastercard, saw notable advertised interest rate decreases for new cardholders, such as: 

Overall, the online card offer market was quiet heading into the 2021 holiday season.

Average Interest Rates by Credit Card Transaction Type

You can use credit cards for three main types of transactions: purchases, balance transfers, and cash advances. APRs often vary depending on which of those transactions you make. Some issuers give new cardholders a break by offering low or 0% interest rates on some of those transactions for a limited time.

Purchase APR Deals

Applying for a new credit card to get a promotional purchase APR can be a good idea if you want to finance a large purchase and avoid paying interest. One-quarter of the cards we track for this report (25%, or 86 cards) offer introductory purchase APRs on new accounts. More 0% purchase APRs are advertised online today than there were one year ago. 

  • Typical offer length: On average, these offers last 12 months, which is typical. It’s rare to find purchase APR deals longer than 15 months. Only six cards in our database offer 0% new-cardholder deals longer than 15 months.
  • Best 0% purchase APR deals: The U.S. Bank Visa Platinum Card offers 20 months of 0% on purchases. The new Wells Fargo Reflect Card offers 21 months of 0% interest on purchases if you meet certain requirements.
  • Credit score qualifications: If you want a 0% purchase APR, you’ll likely need stellar credit. More than 95% of such card offers in our database recommend applicants have good or excellent credit.
  • Rate after the no-interest period ends: Cards with promotional purchase APRs charge an average ongoing rate of 18.41%, the lowest ongoing average recorded since April 2021.

Balance Transfer APR Deals

Moving debt from a high-APR credit card to one with a lower or limited-time 0% APR on balance transfers can reduce interest costs and help you pay down debt faster. More than a quarter of the cards tracked by The Balance (27.62%, or 95 cards) currently advertise balance transfer deals to new cardholders, the highest number recorded since March 2020. Balance transfer deals were much less common in 2020 as banks pulled them back to reduce credit risk. 

  • Typical offer length: The average length of balance transfer rate promotions is about 14 months, which is consistent with prior month averages.
  • Longest balance transfer deal: The SunTrust Prime Rewards Credit Card gives new cardholders 36 months to pay off transferred debt at a reduced interest rate of 3.25%.
  • Best 0% balance transfer offer: The longest standard 0% balance transfer APR deal is now 21 months, as offered by the Citi Simplicity and Citi Diamond Preferred cards. The new Wells Fargo Reflect Card offers eligible new cardholders a three-month extension of its 18-month-long 0% balance transfer rate, which bumps the full offer up to 21 months.
  • Credit score qualifications: Much like 0% purchase APR offers, you’ll probably need good credit to qualify for a balance transfer deal. About 92% of the cards in our database with such offers recommend applicants have a good or excellent credit score.
  • Rate after intro period ends: We found the average ongoing APR of balance transfer transactions is 18.39%, the second-highest average recorded since March 2020.

It’s common for cards to offer 0% or low-interest-rate deals on both purchases and balance transfers. More than half of the cards we track that advertise promotional interest-rate deals offer new cardholders dual APR breaks for a limited time.

Cash Advance Rates

Most cards allow you to tap your available credit by using the card to withdraw cash at an ATM. More than 88% (304 cards) of the offers we track allow cash advances, but that convenient feature comes at a cost.

  • Average cash advance APR: 25.64%, unchanged since October and still the highest average recorded in 2021. More broadly, the average cash advance APR is inching closer to its pre-pandemic high (25.69%).
  • Highest cash advance APR: A steep 36%, as charged by both the Fortiva Credit Card and First PREMIER Bank Gold Mastercard.

On top of high APRs, cash advance transactions usually come with added fees and start accruing interest immediately, so avoid taking advances—especially if you are trying to minimize costs.

Penalty Interest Rates

If you fall behind on your monthly credit card payments, if you exceed your credit limit, or if your bank returns a monthly payment, your standard purchase APR may be raised to the penalty interest rate (or default rate). 

While not all credit cards charge penalty rates, many do, including 128 of the cards surveyed for this report (about 37%). Penalty rates have become more common over the past year, too.

  • Average penalty APR: Based on our card sample, the average default rate is 28.88%. That’s 8.43 percentage points higher than the average purchase APR and the second-highest average recorded in 2021 so far. (The August average was 28.90%.)
  • Highest penalty APR: 29.99% is a popular penalty rate, as 88 cards in our database charge it. The highest penalty rate once exceeded 30%, but issuers dialed back those steep rates starting in August 2020. 

Pay your bill on time every month and you won’t have to worry about a high-cost penalty interest rate. If you can’t afford to make a payment, check with your card issuer to see what financial hardship options are available to protect your credit card APR and your credit score.

Average APR Based on Recommended Credit Score

Based on the card offer data collected by The Balance, credit cards marketed to consumers with bad and fair credit scores (below 670, according to FICO) have an average purchase APR of 23.65%. This is 4.25 percentage points above the 19.40% average APR of cards marketed to those with good or excellent credit.

A good credit score indicates to lenders that you can manage credit cards, loans, or debt repayment. Conversely, cards that accept applicants with lower credit scores charge higher interest rates to make up for the risk of default.

The type of credit score you see advertised on a card offer page (or in one of our reviews) is a recommendation. It’s a good benchmark, but your credit score is just one of several factors that credit card issuers consider when deciding whether or not to approve a card application.

What Average Credit Card APRs Mean for You

It’s important to be mindful of credit card interest rates, especially if you reach for credit cards more often in the busy shopping season ahead. 

“Even if you aren’t carrying a balance now, there’s a chance you will in the future,” said Bruce McClary, vice president of communications for the National Foundation of Credit Counseling. “You don’t know when you might have to fall back on your credit card for help covering expenses.”

If you’re in the process of paying off credit card debt, remember that credit card interest compounds, meaning previous interest charges are included in each monthly interest calculation.

As a result, card balances can grow quickly, and every APR percentage point matters. Even small changes to your card’s interest rate—similar to what we’ve seen happen to the average credit card APR over the past year—can add up to higher debt costs. If you fall behind on your monthly payments, those costs can rise even more under a much higher penalty APR.

Methodology

This monthly report is based on credit card offer data collected and monitored on a rolling basis by The Balance for 344 U.S. credit cards in November 2021. Our data pool includes offers from 45 issuers, including the largest national banks. We track average interest rates on both a weekly and monthly basis for each card category plus the overall average rate for all cards.

How We Calculate APR Averages

We gather purchase and transaction APR information from current credit card terms and conditions. If a credit card APR is posted as a range, we first determine the average of that range, then use that number in our overall average rate calculations. We do this so the statistics are true averages, not skewed toward the low or high end of a spectrum.

The overall average APR in this report is an average of the average APR in each category we track: travel, cash-back, secured, business, student, and store cards.

How We Calculate Average Rates vs. the Fed

We look at interest rates by card category and transaction type to give a clearer view of the interest rate you can expect to pay based on the kind of card you're using or how you plan to use it. By comparison, the August 2021 data from the Federal Reserve puts the average credit card APR at 14.54%. However, the Fed calculates its rate based on voluntary reporting from 50 credit-card-issuing banks, and it's unclear what goes into those averages or what types of cards make up those averages.

The Fed also reports an average rate on accounts that are charged interest (meaning those that carry balances month-to-month), although its calculation gives more weight to accounts with high balances. In August 2021, the average interest rate on credit cards accruing finance charges was 17.13%, very close to the record high of 17.14% reported in the second quarter of 2019.

We look at interest rates by card category and transaction type to give a clearer view of the interest rate you can expect to pay based on the kind of card you're using or how you plan to use it. By comparison, the August 2021 data from the Federal Reserve puts the average credit card APR at 14.54%. However, the Fed calculates its rate based on voluntary reporting from 50 credit-card-issuing banks, and it's unclear what goes into those averages or what types of cards make up those averages.

The Fed also reports an average rate on accounts that are charged interest (meaning those that carry balances month-to-month), although its calculation gives more weight to accounts with high balances. In August 2021, the average interest rate on credit cards accruing finance charges was 17.13%, very close to the record high of 17.14% reported in the second quarter of 2019.

How We Categorize Cards

We assign a category to each credit card in our database, and a card can go in only one category. Here's how we define them:

  • Business credit cards: Cards that small-business owners can apply for and use to make purchases for their companies.
  • Cash-back credit cards: Cards that offer cash back on most purchases you make with the card.
  • Travel rewards credit cards: Cards that allow you to earn extra points or miles on travel purchases, either with specific travel brands or on a variety of travel-related expenses. Cards that offer high-value travel redemption options are also part of this group.
  • Student credit cards: Cards for college or graduate students who are at least 18 years old.
  • Secured credit cards: Cards requiring a security deposit that’s usually the same amount as the credit limit. These cards are aimed at helping people with poor credit or no credit history build credit.
  • Store credit cards: Cards that you can use at particular retail stores and sometimes other places. They often offer discounts or rewards for purchases made at the associated store (or chain of stores).
  • Other: Cards that do not fit any of the following categories: business, cash back, student, travel, secured, and store. This includes cards that offer very few—if any—features.