Average Credit Card Interest Rate Is 21.33%

The average interest rate made another big jump in July

person with striped long-sleeved shirt holding a credit card
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The average credit card interest rate for purchases is now 21.33%, according to July data collected by The Balance.

Key Takeaways

  • The average APR on credit card purchases moved up to 21.33%, continuing the trend of sharp monthly rate hikes as the Fed acts to curb inflation.
  • Store credit cards have the highest average interest rate at 25.24%.
  • Business credit cards have the lowest average interest rate at 18.66%.
  • Student credit cards have the lowest average interest rate among consumer cards at 19.93%.

In July, The Balance recorded 181 pricing changes among the offers in its database. Most of the interest-rate moves were hikes of 0.75 percentage points (144 price changes) or 0.50 percentage-point (22 price changes). We also recorded five 2.0 percentage point increases. All told, the rate moves pushed the average up 0.27 percentage points in July.

While issuers adjusted their rates throughout July, we saw a flurry of activity at the start of the month as issuers responded to the Federal Reserve’s mid-June rate increase, and again at the end of July in response to the central bank’s rate increase that month. In both cases, the Federal Reserve hiked its rate by 0.75 percentage points. Credit card interest rates are based on the prime rate, which closely follows the rate set by the Federal Reserve.

Two cards in our database adjusted interest rates down: AvantCard and the RCI Elite Rewards Mastercard

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 score and the type of transaction you use your card for.

Average Credit Card Interest Rates Based on Card Type
Average APR 1 Month Ago 6 Months Ago 1 Year Ago
All Credit Cards 21.33% 21.06% 20.47% 20.25%
Business Credit Cards 18.66% 18.28% 17.30% 17.57%
Student Credit Cards 19.93% 19.69% 20.02% 18.73%
Cash-Back Credit Cards 20.29% 20.04% 19.34% 19.24%
Travel Rewards Credit Cards 20.53% 20.14% 19.35% 19.32%
Secured Credit Cards 21.83% 21.63% 20.74% 20.55%
Other 22.82% 22.73% 22.25% 22.02%
Store Credit Cards 25.24% 24.91% 24.28% 24.30%

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.

Cash Advance Rates

Most credit cards allow you to tap your available credit by using the physical card to withdraw cash at an ATM or via a convenience check. More than 89% (315 cards) of the offers we track allow cash advances, but that convenient feature typically comes at a cost: an APR that’s higher than the average rate across all cards.

  • Average cash-advance APR: 26.86%, up from last month’s 26.38%. In many cases, issuers hoisted cash-advance rates alongside their purchase-rate hikes—0.50 or 0.75 percentage points.

On top of high APRs, cash-advance transactions usually come with an added fee and accrue interest immediately, so it’s best to avoid taking advances—especially if you’re trying to minimize costs.

Penalty Interest Rates

A credit card’s penalty rate is a rate that some credit card issuers charge you that is higher than your regular APR. If you fall behind on your monthly credit card payments, exceed your credit limit, or your bank returns a monthly payment, your standard purchase APR may rise to the penalty interest rate (or “default rate”).

While not all credit cards charge penalty rates, many do, including 137 (about 39%) of the cards surveyed for this report:

  • Average penalty APR: Based on The Balance’s card sample, the average penalty rate in July was 29.13%. That’s up slightly from June’s 29.08% and is 7.8 percentage points higher than July’s average purchase APR.
  • Highest penalty APR: 30.90% is the highest penalty rate the cards in our database charge, but only one card charges it. The most popular penalty APR is 29.99%; 107 cards in our database charge it.

If you pay your credit card bill on time every month, 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 24.25%. This is 3.67 percentage points higher than the 20.58% average APR of cards marketed to people with what FICO considers good or excellent credit.

A good credit score indicates to lenders that you can manage credit cards, loans, or debt repayment, and it often results in lower interest rates. 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 The Balance’s reviews) is a recommendation. While it’s a good benchmark, your credit score is just one of several factors that credit card issuers consider when deciding to approve a card application.

What Average Credit Card APRs Mean for You

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. So 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 355 U.S. credit cards. The most recent data was collected throughout July 2022. 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

The Balance gathers 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 figure 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, store cards, and “other” (which includes balance-transfer cards and low-cost, no-frills 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 May data (the most recent available) from the Federal Reserve puts the average credit card APR at 15.13%. 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 May, the average interest rate on credit cards accruing finance charges was 16.65%. The record high in the series, which dates to 1994, was 17.14%, recorded 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 to help people with poor or no credit build credit.
  • Store credit cards: Cards 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.

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Article Sources

  1. Board of Governors of the Federal Reserve. "Open Market Operations."

  2. MyFICO. "What Is a FICO Score?"

  3. Board of Governors of the Federal Reserve System. "Consumer Credit - G.19," see Charts.

  4. Board of Governors of the Federal Reserve System. "Consumer Credit - G.19," see About.

  5. Board of Governors of the Federal Reserve System. "Consumer Credit - G.19,” see Historical Data.