Average Credit Card Interest Rates Fell in November

APRs continue to inch down as credit card balances reach new record high

close-up of red, yellow, and blue credit cards in wallet
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The average credit card interest rate is now 21.25%, down a slight 0.15 percentage points from the previous month, according to data collected by The Balance in November 2019.

This change was driven by major credit card issuer responses to three Federal Reserve rate cuts made this year. Since the latest Fed rate action on Oct. 30, 2019, The Balance has seen credit card annual percentage rates (APRs) inching down across the board. 

However, while lower APRs means you may see (slightly) lower credit card debt finance charges on your monthly statements, average interest rates are still quite high. Don’t use this news as an excuse to overspend and rack up debt during this busy holiday shopping month. Carrying credit card balances month-to-month is a high-cost financial decision that can take a serious toll on your budget and credit score over time. 

Key Takeaways

  • The average APR on credit card purchases is 21.25%.
  • Store credit cards have the highest average interest rate.
  • Business credit cards have the lowest average interest rate.
  • Cash-back credit cards have the lowest average interest rate among consumer cards.

Card type is just one of the things that determines a credit card interest rate. To learn how we categorize cards based on type for this report, see the methodology at the bottom of this page. The other main factors are the kind of transaction you use the card for (more on that later in the “Average Interest Rates by Credit Card Transaction Type” section) and your credit standing. 

A credit card issuer often has a range of APRs it might charge on a certain card. The better your credit score, the more likely you are to get approved for an interest rate on the lower end of the range, and vice versa.

Seasonal Rate Focus: Balance Transfer APRs

Moving credit card debt from a high APR card to one with a lower or limited-time 0% balance transfer rate can reduce interest costs and help you pay down debt faster. 

It’s a great time of year to seriously consider a balance transfer card boasting an introductory APR offers if you have good credit and plan to take on a New Year’s resolution to pay off card balances. Most credit cards (about 75% of all cards in our database) allow cardholders to request balance transfers, and more than a quarter (28.22%) offer introductory balance transfer rates right now.

Most cards touting promotional balance transfer rates give cardholders at least one year, often longer, to pay off a balance transfer under a significantly reduced or 0% APR. Only six cards in our survey are advertising promotional balance transfer rate offers that last less than 12 months. 

Overall, the average length of balance transfer rate promotions is about 14 months. The longest offer, boasted by the SunTrust Prime Rewards Credit Card, gives you 36 months to pay off transferred debt under a low 4.75% APR.

Even when generous balance transfer deals end, transferring pricey debt may still save you money on interest. The average standard APR for balance transfers is 19.25%, which is 2 percentage points lower than the average purchase APR for all cards. 

Average Interest Rates by Credit Card Transaction Type

In addition to balance transfers, credit cards can be used to make cash advances, and, of course, purchases. APRs can vary depending on which of those transactions you make, too. 

Purchase APR Deals

If you want to finance a large purchase with a new credit card, finding a card that offers a promotional purchase APR (such as 0% for 15 months) is fairly easy. Purchase APR deals are common: Nearly one-quarter (24.74%) of the cards we track for this report offer new cardholders introductory purchase APRs right now. 

  • On average, these offers last about 12 months.
  • The longest purchase rate offer is a mammoth 36 months, available on the SunTrust Prime Rewards Credit Card. 
  • Cards with promotional APRs on purchases charge an average ongoing rate of 19.25%.

Cash Advance Rates

Most credit cards allow you to tap your credit line by using the card to withdraw cash at an ATM, but such transactions aren’t cheap. Of the cards we track, 86% allow cash advances.

  • The average APR on cash advances is currently 26.18%.
  • The highest cash advance APR we found is 36%, charged by both the Fortiva Credit Card and First Premier Bank Gold Mastercard.

On top of steep APRs, Cash advance transactions come with extra fees and start accruing interest immediately, so avoid making them if possible.

Penalty Interest Rates

If you fall extremely behind on your credit card payments, exceed your credit limit, or if your bank returns a monthly payment, the card issuer may increase your standard purchase APR to the penalty interest rate. The penalty rate (which is also called the default rate) is the highest interest rate card issuers charge. 

Not all cards charge penalty rates, but many do, including 106 of the cards surveyed for this report (about 37%). The average penalty APR in our sample of cards is a steep 29.10%—7.85 percentage points higher than the average purchase APR. It gets worse, too. We found penalty rates may be as high as 31.49%, which is charged by five cards issued by HSBC: HSBC Cash Rewards Mastercard, HSBC Platinum Mastercard with Rewards, HSBC Advance Mastercard, HSBC Premier World Mastercard, and the HSBC Premier World Elite Mastercard. 

Pay your bill on time each month and you won’t have to worry about a penalty interest rate.

What Has Changed: More APR Decreases

Most credit card interest rates are variable, which means they can go up or down based on what happens with the federal funds rate, a baseline interest rate controlled by the Federal Reserve. Until recently, the Fed had slowly increased its rate while the U.S. economy recovered from the financial crisis that started in 2007. Then, on Aug. 1, 2019, the Fed changed course and lowered its federal funds rate to help stimulate the economy once again. 

There have been two additional cuts since August, the most recent of which was issued Oct. 30, 2019. It’s typical for credit card issuers to promptly respond and adjust their own rates accordingly, and that’s exactly what happened in November. The Balance found 20 issuers lowered standard APRs by 0.25 percentage points between Nov. 1-30, 2019: Barclays, BMW Bank, Chase, Citi, Comenity, Credit One, Deserve, Discover, HSBC, Luxury Card, Navy Federal Credit Union, PNC, Sallie Mae Bank, Simmons Bank, State Farm Bank, Synchrony Bank, USAA, U.S. Bank, Web Bank, and Wells Fargo.

Banks don’t have to notify you about rate changes when interest rates are variable and adjusted based on an index, as credit card rates are. That’s true whether the change is an increase or decrease. Watch your monthly statements to keep tabs on the cost of carrying credit card debt.

The Balance recorded only two other APR changes last month: The interest rates of both the Bank of America Platinum card increased by 1 percentage point due to a card network shift from Visa to Mastercard. Unrelated to that program change, Bank of America also increased the APR of its Alaska Airlines Business credit card by 1 percentage point.

Meanwhile, Card Balances Are Climbing

In this lower interest rate environment, cardholders are carrying more credit card debt than ever before. The U.S. revolving debt balance (which refers primarily to credit card debt) first reached a historic peak in July: $1.081 trillion. It then decreased slightly in August, but has resumed its climb once again. The latest G.19 report from the Fed report puts the October revolving debt balance at a new sky-high level: $1.089 trillion.

What Average Credit Card APRs Mean For You

Even if they are declining, credit card interest rates are still important numbers to keep track of, especially if you’re spending more than usual around the holidays. Yes, the cost of debt goes down when interest rates decrease, but APRs are still high, and credit card interest compounds, which can make it hard to reign in balances later.

“If you’re already in a significant amount of debt, piling on more debt during this time of year can make your situation unmanageable,” says financial attorney Leslie H. Tayne, founder and managing director of Tayne Law Group, a New York law firm focused on debt resolution. “Overspending during the holidays can mean you’ll still be paying off purchases well into the new year.”

Don’t be swayed by cheery news of lower rates, holiday shopping promotions, and store card offers you don’t need. Use credit cards responsibly, and pay off card balances during this welcome break in interest costs. 

“Having no balance on your credit cards means you don’t have to be worried about how a rate change will (or will not) affect you,” adds Tayne.

Methodology

This monthly report is based on credit card offer data collected and monitored on a rolling basis by The Balance for 287 U.S. credit cards Nov. 1-30, 2019. Our data pool includes offers from 43 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, 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. For comparison, the latest data from the Federal Reserve puts the average credit card APR at 15.10%. 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 charged interest (meaning those that carry balances month-to-month), though its calculation gives more weight to accounts with high balances. In the third quarter of 2019, the average interest rate on credit cards accruing finance charges was 16.97%, down from a record high 17.14% reported in the second quarter. 

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 small business owners can apply for and use to make purchases for their companies. 
  • Cash-back credit cards: Cards that offer you a little rebate 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 that require a security deposit that’s usually the same amount as the credit limit you’ll be given. These cards are aimed at helping people with poor credit or no credit history to build credit.
  • Store credit cards: Cards you can use at particular retail stores, and sometimes other places as well. 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. 

Article Sources

  1. Federal Reserve. "Open Market Operations," Accessed Dec. 6, 2019.

  2. Federal Reserve. "Implementation Note issued October 30, 2019," Accessed Dec. 6, 2019.

  3. Federal Reserve. "Consumer Credit - G.19: Current Release," Accessed Dec. 6, 2019.

  4. Tayne, 2019.

  5. Federal Reserve. "Consumer Credit - G.19 - About," Accessed Dec. 6, 2019.