Average Credit Card Interest Rate Is 20.28%

Part of

Small rate changes and new cards have emerged, but APRs are quiet overall

The average credit card interest rate remains unchanged at 20.28%, according to data collected by The Balance. 

Despite a handful of online offer changes and the addition of four new cards to our database, the average credit card interest rate held steady in May. The mean annual percentage rate (APR) 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%. This is 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.
  • Student credit cards have the lowest average interest rate among consumer cards.

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 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
  Average APR 1 Month Ago 6 Months Ago 1 Year Ago
All Credit Cards 20.28% 20.28% 20.24% 20.18%
Business Credit Cards 17.57% 17.96% 17.81% 17.93%
Student Credit Cards 18.83% 18.83% 18.83% 18.78%
Cash-Back Credit Cards 19.24% 19.18% 19.09% 19.02%
Travel Rewards Credit Cards 19.30% 19.29% 19.21% 20.08%
Secured Credit Cards 20.55% 20.29% 20.14% 20.46%
Other 22.18% 22.18% 22.39% 20.63%
Store Credit Cards 24.30% 24.26% 24.24% 24.35%

A credit card often has a range of APRs, such as 14.99% to 26.99%. 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 May

Similar to prior months, The Balance observed a little bit of interest rate activity in May,, but nothing substantial enough to move the overall average APR needle. We added the pricing details for four new rewards cards to our online offer database (more on that below). We also recorded purchase, penalty, and cash advance APR adjustments for a handful of cards issued by American Express, Bank of America, and Citi.

For example, Amex nudged the penalty APRs on several of its cards, including the Platinum, Business Platinum, Gold, Blue Cash Everyday, and Blue Cash Preferred cards up to 29.99% from 29.24%. The Bank of America Travel Rewards Card for Students’ variable APR range is also now a full percentage point higher on the low end and a percentage point lower on the high end: 13.99% to 23.99%, based on applicant creditworthiness.

None of the interest rate changes recorded in May were based on industry-wide rate changes, which has been the norm for many 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. 

Since then, the Fed has maintained its benchmark rate (the federal funds rate) near zero. It has said it will hold rates steady until inflation and employment rates recover even more, according to the latest policy statement.

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

Four New Rewards Cards Added to Data Pool

We added four new credit cards to our database in May to track their advertised interest rates and pricing details: 

  • TD Double Up Card: 14.99%-24.99% variable purchase APR
  • FNBO Evergreen Rewards Visa Card: 18.24%-25.24% variable purchase APR
  • U.S. Bank Altitude Connect Visa Signature Card: 15.99%-23.99% variable purchase APR
  • Chime Credit Builder Visa Secured Card: No purchase APR

The TD Double Up Card and the Evergreen Rewards Visa are both cash-back rewards cards with interest rates that are on par with similar card offers, so these additions didn’t change the average cash-back card APR very much. We consider the Altitude Connect card from U.S. Bank a flexible travel rewards card. Its advertised interest rate range is in line with other similar cards, so the average APR for all travel cards we track went largely unchanged. 

The Chime Credit Builder card is an oddball and doesn’t charge an interest rate, since cardholders must move money from a Chime Spending Account to their card in order to use it.

Average Interest Rates by Credit Card Transaction Type

There are three main types of transactions you can use credit cards for: purchases, balance transfers, and cash advances. APRs often vary depending on which of those transactions you make, and 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 but avoid paying interest. Nearly one-quarter of the cards we track for this report offer new cardholders introductory purchase APRs, which is typical 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 0% new-cardholder deals longer than 15 months.
  • 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 stellar credit. Nearly 95% of such card offers in our database recommend applicants have good or excellent credit. 
  • Rate after no-interest period ends: Cards with promotional purchase APRs charge an average ongoing rate of 18.43%, the highest average recorded since interest rates plummeted more than 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. There are fewer promotional balance transfer rates available now compared to before the pandemic, when issuers dialed back such offers, 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 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 0% balance transfer APR deal is 20 months long, 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 applicants have a good or excellent credit score. 
  • Rate after intro period ends: We found the average ongoing APR of balance transfer transactions is 18.16%, up slightly from April. 

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 88% of the cards we track allow cash advances, but that convenient feature comes at a cost. 

  • Average cash advance APR: 25.50%, up slightly compared to prior months, but still below the pre-pandemic average. 
  • 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 extra costs.

Penalty Interest Rates

If you fall seriously 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. 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 111 of the cards surveyed for this report (about 34%). 

  • Average penalty APR: Based on our card sample, the average default rate is 28.67%. That’s 8.39 percentage points higher than the average purchase APR, but still a bit lower than it was at this time last year. 
  • Highest penalty APR: 29.99% is a popular penalty rate, as 61 cards in our database charge it. The highest penalty rate once exceeded 30%, but some 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 23.87%. This is 4.52 percentage points above the 19.35% 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 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 324 U.S. credit cards in May 2021. Our data pool includes offers from 44 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 reflect how and where consumers use their credit cards. These changes are reflected in the monthly change line graph in the introduction of this article, and the average card interest rate data table shortly below that. 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. 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 February 2021 data from the Federal Reserve 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 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 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 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 you get. These cards are aimed at helping people with poor credit or no credit history 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.