Average Credit Card Interest Rate Was 20.21% in July 2020

0% balance transfer offers dwindled, and offer lengths shrank

Stack of multicolored credit cards close-up view with selective focus.
••• alexialex / Getty Images

This post is for historical reference. Specific product rates may have changed since publication. Please see banks' sites for current rates. For current rates and analysis, see Average Credit Card Interest Rates.

The average credit card interest rate was 20.21% in July 2020, according to data collected by The Balance. 

That’s down a hair from June’s average rate of 20.22%, but not because of any major card APR shifts. The Balance refined database calculations in July, and recorded just a few small card APR increases, but those offer changes did not move the average rate needle much. 

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 chart above, and the average card interest rate table below. Rates published prior to August 2020 may not reflect these changes.

Overall, interest rates were pretty stable in July, a stark contrast to falling rates in the spring after the Federal Reserve made emergency rate cuts in March as the pandemic flipped the U.S. economy upside down. Credit card issuers were grappling with the financial and economic impacts of the coronavirus, and to avoid taking on more consumer debt balances right now, banks amended balance transfer promotional offers for new cardholders.  

Key Takeaways

  • The average APR on credit card purchases was 20.21%, down 1.03 percentage points from January 2020 
  • Store credit cards had the highest average interest rate.
  • Business credit cards had the lowest average interest rate.
  • Student credit cards had 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).

Average Credit Card Interest Rates Based on Card Type
  Current Average APR Last Month 6 Months Ago
All Credit Cards 20.21% 20.22% 21.24%
Business Credit Cards 17.93% 17.93% 19.10%
Student Credit Cards 18.78% 18.78% 20.61%
Cash-Back Credit Cards 19.12% 19.07% 20.23%
Travel Rewards Credit Cards 19.21% 19.21% 20.47%
Secured Credit Cards 20.14% 20.14% 21.22%
Other 22.15% 22.12% 21.65%
Store Credit Cards 24.17% 24.28% 25.39%

What Happened: More Balance Transfer Deal Changes

A few issuers adjust a handful of purchase APRs for new cardholders in July, including these specific card offers:

  • Merrick Bank Double Your Line Visa Credit Card: Low end of variable APR range was increased by 2% (was 17.45%-27.70%, is now 19.45%-27.70%)
  • Best Western Rewards Mastercard: Variable APR range increased by 0.25 percentage points (was 16.74%-22.74%, is now 16.99%-22.99%)
  • Best Western Rewards Premium Mastercard: Variable APR range increased by 0.25 percentage points (was 18.74%- 22.74%, is now 18.99%-22.99%)

The most notable interest rate change was found among promotional balance transfer offers. 

0% Balance Transfer APR Offers Cut Back

In March 2020 there were 95 cards in our database advertising promotional balance transfer rate offers for new cardholders, and in July 2020 there were 78. 

Fewer cards were offering balance transfer APR deals that last 15 months or longer these days, too. Bank of America decreased the 0% balance transfer APR offer lengths on two of its cards—Bank of America Cash Rewards Credit Card and Bank of America Cash Rewards for Students—from 15 months to 12. 

The Discover it Balance Transfer card offer, which once boasted an 18-month-long 0% balance transfer APR for new cardholders, was also pulled down in July. In addition, we noticed U.S. Bank removed mentions of promotional balance transfer offers from business card marketing materials, although the offers were still in the card terms and conditions. 

This card offer trend was largely driven by the pandemic and how lenders are (and are not) extending new lines of credit right now. Banks were wary of taking on extra financial risk in the form of large consumer debt balances that may not be repaid.

American Express is a good example of this. After cutting promotional balance transfer deals from several cards in June, the issuer also removed the transfer option for current cardholders.

“We are not currently offering balance transfers across all our card products,” according to an American Express spokesperson statement emailed to The Balance after the change. “From time to time, we make adjustments to our offerings to ensure we’re managing risk for our customers and the company in a responsible way.”

Several cards that previously cut balance transfer rate offers did not re-add them in July, either, such as the Capital One Quicksilver Cash Rewards Card and the U.S. Bank Visa Platinum Card. The Chase Slate card, which was known for its generous balance transfer offer, was also still not open for new online applications in July 2020.

Average Interest Rates by Credit Card Transaction Type

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

For the third consecutive month, roughly one-quarter (25%) of the cards we track for this report offered new cardholders introductory purchase APRs. 

  • On average, these offers lasted about 12 months.
  • The longest introductory purchase rate offer was 20 months, which was 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 18.26%.

Balance Transfer APR Deals

As mentioned earlier, there were fewer promotional balance transfer rates available in July 2020, and some offers were shorter than they once were.

  • The average length of these balance transfer rate promotions was about 14 months, consistent with prior month averages despite offer changes.
  • The longest offer overall was touted by the SunTrust Prime Rewards Credit Card, which gave new cardholders 36 months to pay off transferred debt at a reduced interest rate of 3.25%. 
  • The best 0% balance transfer APR deal was 20 months long, offered by the U.S. Bank Business Platinum Card. The longest 0% offer on a consumer card was 18 months, as advertised by the HSBC Gold Mastercard, Citi Simplicity, Citi Diamond Preferred, Citi Double Cash Card, and the Wells Fargo Platinum Card.
  • When promotional rate offers end, we found the average APR of balance transfer transactions was 18.08%.

Cash Advance Rates

About 89% of the cards we track allowed cash advances in July 2020.

  • The average APR on cash advances was 25.36%, nearly unchanged since April 2020.
  • The highest cash advance APR we found was 36%. That steep cash advance APR was charged by both the Fortiva Credit Card and First PREMIER Bank Gold Mastercard.

Penalty Interest Rates

While not all credit cards charge penalty rates, many do, including 105 of the cards surveyed for this report (about 33%). The average penalty APR in our card sample was a steep 28.84%, nearly unchanged since May 2020. That’s 8.63 percentage points higher than the average purchase APR in July.

The Balance found that despite rate cuts made earlier in the year, penalty rates were as high as 30.90%. That monstrous rate was charged by five Capital One business cards in July 2020: Capital One Spark Cash for Business, Capital One Spark Classic for Business, Capital One Spark Miles for Business, Capital One Spark Cash Select for Business, and Capital One Spark Miles Select for Business. The highest consumer card penalty rate was 30.74%, as charged by the BMW Credit Card in July. 

Average APR Based on Recommended Credit Score

Based on the card offer data collected by The Balance, credit cards marketed to those with bad/fair credit scores (below 670, according to FICO) had an average purchase APR of 25.20%, 5.93 percentage points above the average APR of cards marketed to those with good/excellent credit (19.27%).

Methodology

This monthly report is based on credit card offer data collected and monitored on a rolling basis by The Balance for 314 U.S. credit cards in July 2020. Our data pool included 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 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.