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Average Credit Card Interest Rate Was 20.24% in November 2020

Interest rates were stable heading into the holidays

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This post is for historical reference.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 20.24% in November 2020, according to data collected by The Balance.

The average credit card interest rate changed very little in the past eight months. The Balance recorded just a few tiny APR changes in November 2020 and added one new card to our database. Overall, credit card interest rates were stable with the fourth quarter is underway, and the average APR remained below pre-pandemic levels.

Key Takeaways

  • The average APR on credit card purchases was 20.24%, down 1 percentage point since January 2020 and 1.06 percentage points year-over-year.
  • Store credit cards had the highest average interest rate.
  • Business credit cards had the lowest average interest rate overall.
  • 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 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
  November 2020 Average APR October 2020 Average APR May 2020 Average APR November 2019 Average APR
All Credit Cards 20.24% 20.23% 20.18% 21.30%
Business Credit Cards 17.81% 17.78% 17.93% 19.19%
Student Credit Cards 18.83% 18.83% 18.78% 20.58%
Cash-Back Credit Cards 19.09% 19.09% 19.02% 20.01%
Travel Rewards Credit Cards 19.21% 19.20% 20.08% 21.08%
Secured Credit Cards 20.14% 20.14% 20.46% 21.08%
Other 22.39% 22.39% 20.63% 21.63%
Store Credit Cards 24.24% 24.18% 24.35% 25.50%

What Happened in November 2020

November was another quiet month for credit card APRs. The Balance only recorded small interest rate updates for four cards, three of which are American Express business charge cards that now offer a financing option via Pay Over Time. Only one airline-branded consumer card saw an APR adjustment in November:

  • Norwegian Reward World Mastercard: Variable purchase APR range was changed from 19.49%-23.39% to 17.99%-25.99%.

This change was not driven by rate changes made by the central bank. Interest rates moved more dramatically earlier this year following two emergency federal funds rate cuts made by the Federal Reserve when the coronavirus pandemic started to disrupt the U.S. economy. 

The fed funds rate (which drives the prime rate that variable credit card APRs are based on) is resting at a 0%-0.25% range, which will likely be true until the economy and employment have rebounded from the pandemic, according to the latest Federal Reserve statements.  Until then, credit card interest rate changes will be driven by issuing banks seeking to adjust card costs to help cover potential lending risks or to appeal to consumers in a different way.

0% APR deals have been subdued this year, but The Balance recorded one November offer change worth noting. The TD Bank Cash Credit Card slashed its promotion and is now only offering new cardholders no interest on purchases for six months instead of 15. 

New Credit Card Added to Data Pool

The Balance added one new card to our database in November 2020. We are now tracking interest rates, fees, rewards, and other details for the CareCredit Credit Card from Synchrony Bank, a card offered by medical providers to help patients finance health care costs. Since the card can’t be used everywhere, and it may offer promotional APR deals with deferred interest, like a retail credit card, we categorized it as such, which nudged the average retail card APR up slightly. 

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

One-quarter (25%) of the cards we tracked for this report offered new cardholders introductory purchase APRs, which was the case for most of 2020. 

  • On average, these offers lasted about 12 months, which has also been the norm. 
  • The longest introductory purchase rate offer was 20 months, which was offered by the U.S. Bank Visa Platinum Card. 
  • Cards with promotional purchase APRs charged an average ongoing rate of 18.22%.

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 the beginning of 2020, but about 25% of the cards tracked by The Balance offered such deals to new cardholders. 

  • The average length of these balance transfer rate promotions was about 14 months, which was consistent with prior month averages.
  • The longest offer overall was touted by the SunTrust Prime Rewards Credit Card, which gives you 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, once again offered by the U.S. Bank Visa Platinum Card.
  • When promotional rate offers end, we found the average APR of balance transfer transactions was 18.03%, just like it was in October.

Cash Advance Rates

About 88% of the cards we track allowed cash advances in November 2020, but that convenient feature comes with a cost. 

  • The average APR on cash advances was 25.37% in November 2020, unchanged since October and little changed since April.
  • The highest cash advance APR we found was a steep 36%, charged by both the Fortiva Credit Card and First PREMIER Bank Gold Mastercard.

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, 106 of the cards surveyed for this report did (about 34%). The average penalty APR in our card sample was a steep 28.68%, which was 8.44 percentage points higher than the average purchase APR, but largely unchanged over the past couple of months. The highest recorded penalty rate once exceeded 30%, but some issuers dialed back those steep default rates this summer.

Average APR Based on Recommended Credit Score

Based on the card offer data collected by The Balance, credit cards marketed to consumers with bad/fair credit scores (below 670, according to FICO) had an average purchase APR of 23.74%, 4.48 percentage points above the average APR of cards marketed to those with good/excellent credit (19.26%) in November 2020.

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. 

What Average Credit Card APRs Mean For You

There may be many important financial matters on your radar right now, but credit card interest rates are still important to watch, especially if you are spending more this time of year or paying down an existing balance.

The Balance confirmed many banks are still offering relief options for those with financial difficulties, including skipped payments and waived fees with no negative impact on your interest rate or credit report. However, be mindful that even if your monthly credit card payments are deferred, those accounts are probably still accruing interest.

“Most if not all credit cards work on compound interest, meaning you do not pay one flat interest payment to borrow the money from the start of the loan, but the interest re-calculates every month based on the balance at that time,” said Jeremy Lark, senior manager of client services for GreenPath Financial Wellness, a nonprofit credit counseling agency. 

If you have been watching your balance, you may be in for a surprise when you start making payments again. 

“Even if you haven’t used your credit card since the deferral, your balance may have increased during this time simply because of the compound interest,” Lark said in an email to The Balance. “This could require a larger minimum payment than you were used to making before the deferment.”

When making card payments, prioritize the balances you may already have. Interest rates are pretty stable right now, but even single-digit APRs can balloon debt costs over time.  

“As balances grow and interest charges build up, it can make the debt seem insurmountable,” said Amy Maliga, financial educator with Take Charge America, another nonprofit credit and debt counseling provider. “Try to make more than the minimum payment each month to start chipping away at the principal and stop charging on that card until it’s paid off.”

It’s even more important to be mindful of credit card interest rates as the holiday shopping season is in full swing. If you use a credit card to buy gifts, Maglia recommends using the card in your wallet with the lowest APR and making a plan to quickly pay off the expense. 

Alternatively, “If you currently have excellent credit, consider opening a zero-interest rate card for holiday purchases and paying off holiday balances before interest begins to accrue,” Maliga said in an email to The Balance. 

Methodology

This monthly report was based on credit card offer data collected and monitored on a rolling basis by The Balance for 316 U.S. credit cards in November 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.

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 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. 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 (from the third quarter of this year) puts the average credit card APR at 14.58%. 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 second quarter of 2020, the average interest rate on credit cards accruing finance charges was 16.43%, down from a record high 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 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.