Average Credit Card Interest Rate Is 20.28%

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Small tweaks to online offers nudged the average APR down in April 2021

The average credit card interest rate is currently 20.28%, according to data collected by The Balance. 

A few online-offer changes and the addition of one new card to our database nudged the average down in April by just a fraction of a percentage point to the same place it was in January. The average credit card interest rate has changed little this year, despite occasional online-offer adjustments and the introduction of new cards by banks. 

The average credit card APR is still lower than it was prior to March 2020.

Key Takeaways

  • The average APR on credit card purchases is 20.28%, up slightly from a 2020 low of 20.18% but still below its pre-pandemic peak.
  • Store credit cards have the highest average interest rate.
  • Business credit cards have the lowest average interest rate overall.
  • Student credit cards have the lowest average interest rate among consumer cards.

Average Credit Card Interest Rates (APR) 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 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).

Average Credit Card Interest Rates Based on Card Type
  Current Average APR 1 Month Ago 6 Months Ago 1 Year Ago
All Credit Cards 20.28% 20.29% 20.23% 20.19%
Business Credit Cards 17.96% 17.92% 17.78% 17.93%
Student Credit Cards 18.83% 18.83% 18.83% 18.87%
Cash-Back Credit Cards 19.18% 19.12% 19.09% 19.18%
Travel Rewards Credit Cards 19.29% 19.28% 19.20% 20.11%
Secured Credit Cards 20.29% 20.29% 20.14% 20.23%
Other 22.18% 22.31% 22.39% 20.66%
Store Credit Cards 24.26% 24.24% 24.18% 24.38%

A credit card issuer often has a range of APRs it might charge on a certain card, such as 15.99% 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 Happened in April

The Balance observed a little bit of interest rate activity in April, just as we did in March. We added the pricing details for the new United Quest Card from Chase (more on that below), and recorded a few other purchase and cash advance APR adjustments across the rest of our online-offer database.

For example, U.S. Bank relaunched its State Farm credit card lineup. The new offers feature slightly higher variable APR ranges than before (14.99%-24.99% compared to 14.24%-24.24%, for example) and advertise different no-interest periods for new cardholders. The Bank of America Travel Rewards Credit Card variable APR range also widened by two full percentage points, from 14.99%-22.99% to 13.99%-23.99%, based on applicant creditworthiness.

None of the rate changes recorded in April were based on industry-wide rate changes, which has been the norm for several months. It’s been more than one year since the Federal Reserve made two emergency rate changes in response to economic uncertainty at the start of the coronavirus pandemic, which sent credit card interest rates tumbling for several months before leveling out. 

The federal funds rate is tied to the prime rate, which in turn influences credit card APRs.

Since then, the Fed has maintained its benchmark rate (the federal funds rate) near zero and issued a policy statement saying it will hold rates steady until inflation and employment rates recover even more. 

New Airline Rewards Card Added to Data Pool

A few new credit cards entered the market in April, one of which was added to The Balance’s database to track interest rates and other pricing details: the United Quest Card from Chase. 

The variable interest rate range of this new airline rewards credit card (16.49%-23.49%) is slightly higher than the range offered by similar cards, which was enough to nudge up the travel rewards card category average. This card also charges interest on cash advance transactions and may apply a penalty rate to seriously past-due accounts, so we’ve also factored that data into this report.

Cardholders Are Charging To Credit Cards Again

Consumers really took advantage of the lower interest rates and reined in credit card debt last year, but that trend ended shortly after the new year began. The national revolving debt balance, which is largely composed of credit card debt, increased by about $8.1 billion in February to $974.4 billion, according to the Fed’s latest G.19 consumer credit report. The nation's revolving debt balance is essentially back to where it was in December 2020, but still $123.1 billion less than the all-time high of $1.098 trillion reached in February 2020.

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 the type of transaction, and some issuers give new cardholders a break by offering low or 0% interest rates on some of those types of 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 without paying interest. Nearly one-quarter of the cards we track for this report offer introductory purchase APRs to new cardholders, which is expected based on the past year of offer data.

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 without paying interest. Nearly one-quarter of the cards we track for this report offer introductory purchase APRs to new cardholders, which is expected based on the past year of offer data.

  • Typical offer length: On average, these offers last 12 months, which has also been the norm. It’s rare to find purchase APR deals longer than 15 months: Only five cards in our database offer longer 0% new-cardholder deals.
  • Best 0% purchase APR deal: The U.S. Bank Visa Platinum Card offers 20 months of 0% on purchases. 
  • Credit score qualifications: If you want a 0% purchase APR, you’ll likely need solid credit. Nearly 95% of such card offers in our database recommend that applicants have good or excellent credit. 
  • Rate after no-interest period ends: Cards with promotional purchase APRs charge an average ongoing rate of 18.38%, the highest average recorded since interest rates plummeted a year ago.

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. Fewer promotional balance transfer rates are available now compared to before the pandemic, but about 26% of the cards tracked by The Balance currently offer deals to new cardholders. 

  • Typical offer length: The average length of balance transfer rate promotions is about 14 months, which is consistent with March 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 0% balance transfer APR period is 20 months, once again offered by the U.S. Bank Visa Platinum Card.
  • Credit score qualifications: Much like 0% purchase APR offers, you’ll probably need good credit to qualify for a balance transfer deal. Nearly 92% of the cards in our database with such offers recommend that applicants have a good or excellent credit score. 
  • Rate after intro period ends: We found the average ongoing APR of balance transfer transactions is 18.11%, up slightly from March.

It’s common for cards to offer 0% or low-interest-rate deals on both purchases and balance transfers. More than half 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. Nearly 90%% of the cards we track allow cash advances, but that feature comes at a cost. 

  • Average cash advance APR: 25.47%, up slightly compared to prior months, but still below the pre-pandemic average. 
  • Highest cash advance APR: A steep 36%, 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. It’s best to avoid taking advances, especially if you are trying to minimize extra costs.

Penalty Interest Rates

If you fall seriously behind on your monthly credit card payments, exceed your credit limit, or have a payment returned by your bank, your standard purchase APR may be raised to a penalty interest rate. The penalty rate (also called the “default rate”) is the highest interest rate card issuers charge. While not all credit cards charge penalty rates, many do, including 108 of the cards surveyed for this report (about 34%). 

  • Average penalty APR: Based on our card sample, the average default rate is 28.59%. That’s 8.31 percentage points higher than the average purchase APR, but lower than it was at this time last year. 
  • Highest penalty APR: 29.99% is a popular penalty rate, charged by54 cards in our database. The highest penalty rate once exceeded 30%, but some issuers dialed back the steepest 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 23.87%, 4.55 percentage points above the average APR of cards marketed to people with good or excellent credit (19.32%).

A good credit score indicates to lenders that you can manage credit cards, loans, and debt repayment. Cards that accept applicants with lower credit scores generally 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 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’re using credit cards more often these days.

“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, could add up to higher debt costs:

Methodology

This monthly report is based on credit card offer data collected and monitored on a rolling basis by The Balance for 320 U.S. credit cards in April 2021. 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.

In July 2020 we updated our data collection and analysis to better represent how and where consumers use their credit cards. These changes are reflected in the monthly change chart above, and the average card interest rate table above. Rates published prior to August 2020 in other articles may not reflect these changes.

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. How the Fed Does

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 latest data from the Federal Reserve (February 2021) puts the average credit card APR at 14.75%. 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 which 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 February 2021, the average interest rate on credit cards accruing finance charges was 15.91%, down from a 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 accrue a cash balance on most purchases you make, then allow you to apply that balance as a statement credit or deposit it into a bank account.
  • 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 starting to build credit or want to earn some rewards.
  • 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 designed to help people with poor credit or no credit history to build credit.
  • Store credit cards: Cards issued by particular retail stores that often offer discounts or rewards for purchases made at that store (or a chain of affiliated 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.