Average Credit Card Interest Rate Drops to 20.71%

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Credit Card Interest Rate Report

APRs fall in response to Federal Reserve emergency rate cuts during pandemic

The average credit card interest rate has dropped to 20.71%, according to data collected by The Balance in March 2020.

The Balance has watched issuers steadily lower credit card annual percentage rates (APRs) in response to two emergency rate cuts the Federal Reserve made in March 2020. The rate cuts were made to help companies borrow emergency funds more affordably as the coronavirus makes economic waves, but the changes have affected credit card interest rates, too.  

However, while average interest rates are lower and continue to decline, credit card APRs in general are still quite high, and the national credit card debt balance is even higher.

Key Takeaways

  • The average APR on credit card purchases is 20.71%, down 0.50 percentage points over the past 31 days.
  • Store credit cards still 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 (APR) on Purchases by Card Category

Card type is just one factor that determines a credit card interest rate. To learn how The Balance categorizes cards based on type for this report, check out the methodology at the bottom of this page. Other deciding factors include your credit standing and the type of transaction you use the card for (more on that later in the “Average Interest Rates by Credit Card Transaction Type” section).

A credit card issuer often has a range of APRs it might charge on a certain card, such as 15.99% to 23.99%. The better your credit score, the more likely you are to get approved for an interest rate on the lower end of the range, and vice versa.

What Has Happened: Rate Cuts Roll In as COVID-19 Hits Economy

It didn’t take long for COVID-19 to start making waves in the U.S., including the credit card industry. 

On March 3, as economic uncertainty began setting in, the Federal Reserve made its largest federal funds rate cut since 2008. The fed funds rate—which drives the prime rate most credit card APRs are based on—was lowered by half a percentage point to a 1%-1.25% range. Credit card issuers didn’t respond to this action immediately, but by March 9, several big banks—including Citi, Wells Fargo, and U.S. Bank— had lowered APRs accordingly. 

Then, nearly two weeks later on March 15, the Fed announced another rate cut, driving its benchmark interest rate down a full percentage point to a 0%-0.25% range. Overall, the federal funds rate moved down 1.5 percentage points in March, and card issuers have been consistently revising card rates ever since.

Between March 3 and March 31, 13 credit card issuers lowered interest rates: American Express, Banco Popular, Barclays, Citi, Deserve, Elan Financial, Luxury Card, PNC, Simmons Bank, State Farm Bank, USAA, U.S. Bank, and Wells Fargo. 

When credit card APRs go up or down because of movement in benchmarks they’re based on (such as the prime rate), banks don’t have to notify cardholders of the changes. Because credit card interest rates are often variable, watch your monthly statements to keep tabs on the cost of carrying debt. 

Even though average interest rates are now significantly lower than they were last month, there are many card issuers who have not responded to the Fed actions. The Balance expects credit card APRs to continue to fall in the weeks to come. 

To learn more about the recent Federal Reserve actions and the impact on credit cards, read “Credit Card APRs Start to Sink as Banks Respond to Emergency Fed Actions.”

Meanwhile, Card Balances Linger Near Record High

Interest rate cuts may be welcome news for consumers, who are collectively carrying a lot of credit card debt. 

The U.S. revolving debt balance (which refers primarily to credit card debt) first broke a record in July 2019 when the balance hit $1.082 trillion. It reached another peak in December 2019 with a massive $1.093 trillion balance. The latest G.19 report from the Fed puts the national revolving debt balance a tad lower at $1.090 trillion, which is still incredibly high.

That massive debt balance isn’t expected to go away soon, either.

“I see many Americans having a cash flow crunch in the next few months and without savings to cover it, most will turn to credit cards,” said Alex Wilson, CFP and a financial advisor for financial coaching company SmartPath, Inc.

Average Interest Rates by Credit Card Transaction Type

Let’s dive deeper into interest rates. There are three main transaction types credit cards commonly offer: 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

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. The Balance found purchase APR deals are common right now: More than one-quarter of the cards we track for this report are offering new cardholders introductory purchase APRs. 

  • On average, these offers last about 12 months.
  • The longest introductory purchase rate offer is now 20 months, which is offered by two cards in our database: U.S. Bank Visa Platinum Card and U.S. Bank Business Platinum Card
  • Cards with promotional purchase APRs charge an average ongoing rate of 18.65%.

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. Promotional balance transfer rates are slightly more common than purchase APR deals right now, as nearly one-third of all our tracked cards boast balance transfer rate offers.

  • The average length of these balance transfer rate promotions is about 14 months.
  • The longest offer, touted by the SunTrust Prime Rewards Credit Card, gives you 36 months to pay off transferred debt at a reduced interest rate of 4.75%. The best 0% balance transfer APR offer is 21 months long, offered by the Citi Simplicity card and Citi Diamond Preferred Credit Card.
  • When promotional rate offers end, we found the average APR of balance transfer transactions is 18.65%.

Cash Advance Rates

Most cards allow you to tap your credit line by using the card to withdraw cash at an ATM, but that convenient feature will cost you. About 88% of the cards we track allow cash advances.

  • The average APR on cash advances is currently 25.69%.
  • The highest cash advance APR we found is still 36% despite APRs inching down across the board. That steep cash advance APR is charged by both the Fortiva Credit Card and First PREMIER Bank Gold Mastercard.

On top of steep APRs, cash advance transactions usually come with extra fees and start accruing interest immediately, so avoid making them as much as possible, especially if you are trying to minimize extra costs during this uncertain time.

Penalty Interest Rates

If you fall seriously behind on your monthly credit card payments, 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 105 of the cards surveyed for this report (about 34%). The average penalty APR in our card sample is a steep 28.81%—8.10 percentage points higher than the average purchase APR. The Balance found that despite recent rate cuts, penalty rates may be as high as 31.49%, which was charged by four cards issued by HSBC as of March 31: HSBC Cash Rewards Mastercard, HSBC Advance Mastercard, HSBC Premier World Mastercard, and the HSBC Premier World Elite Mastercard.

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 right now, call your card issuer to see what financial hardship options are available to protect your credit card APR and your credit score. 

What Average Credit Card APRs Mean For You

We know there are many other things grabbing your attention these days, but credit card interest rates are still important numbers to watch, especially if you carry a balance on your card month-to-month. 

“This is really important because it directly impacts how far your payment goes towards paying off your debt,” Wilson said. While the latest interest rate cuts are small, every percentage point counts, so these cuts may save you at least a little money over time. 

For example, say you had a $5,000 balance on a credit card with a purchase APR of 21.99% before the Fed (and your issuer) lowered rates. If you put $150 each month toward your debt, it would take four years and four months to eliminate the balance, and you’d end up paying $2,796 in interest. 

Now say that card’s purchase APR is 1.5 percentage points lower (20.49%), thanks to recent rate cuts. Assuming you still pay $150 monthly, it’ll now take four years and two months to bring the card balance down to $0, and $2,460 of your payments will go toward interest. In this scenario, that tiny 1.5 percentage-point difference between APRs saves you $336 of interest. 

“It’s super important right now to pay attention to every single penny coming and going from your budget,” says financial attorney Leslie H. Tayne, founder and managing director of Tayne Law Group, a New York law firm focused on debt resolution. “Things are tight for many right now and even if they aren’t now, there is concern that they may become tight. It’s a good time to reevaluate the debts that you have, because that will translate into your expenses.”

On that note, now is a good time to see if credit card issuers can lighten your debt burden, even if just temporarily. The Balance has found many card issuers are offering a variety of relief options for those with financial difficulties, including skipped payments and waived fees with no negative impact on your interest rate or credit report.

“Right now some creditors are willing to help, but they are businesses also. At some point that willingness will end. While there is an opportunity now, call each bank and see what they can do to help,” advises Tayne. “Even if you are in a good position, call your creditor. See what they are willing to do for you. It’s your money, and right now, every penny counts.”


This monthly report is based on credit card offer data collected and monitored on a rolling basis by The Balance for 308 U.S. credit cards during March 2020. Our data pool includes offers from 42 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. By comparison, the latest data from the Federal Reserve puts the average credit card APR at 14.87%. 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 fourth quarter of 2019, the average interest rate on credit cards accruing finance charges was 16.88%, 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 April 1, 2020. https://www.federalreserve.gov/monetarypolicy/openmarket.htm

  2. Federal Reserve. "March 03, 2020: Federal Reserve issues FOMC statement." Accessed April 1, 2020.

  3. Federal Reserve. "March 15, 2020: Federal Reserve issues FOMC statement." Accessed April 1, 2020.

  4. Federal Reserve. "Consumer Credit Outstanding (Levels): Major Types of Credit." Accessed April 1, 2020.

  5. Federal Reserve. "Consumer Credit - G.19." Accessed April 1, 2020.

  6. Federal Reserve. "Consumer Credit - G.19." Accessed April 1, 2020.

  7. Federal Reserve. "Consumer Credit - G.19: About." Accessed April 1, 2020.

  8. Federal Reserve. "Terms of Credit at Commercial Banks and Finance Companies." Accessed April 1, 2020.