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Average Credit Card Interest Rate Was 20.23% in October 2020

Interest rate changes were rare as the pandemic continued

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This post is for historical reference.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 20.23% in October 2020, according to data collected by The Balance.

The average credit card interest rate changed very little over seven months. The Balance recorded just a few small APR changes in October and added five new cards to our database, which moved the average interest rate needle slightly. Overall, credit card interest rates were stable as the fourth quarter began, and the average APR remained well below pre-pandemic levels. 

Key Takeaways

  • The average APR on credit card purchases was 20.23%, down 1.01 percentage points since January 2020.
  • 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 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 Oct. 2020 Average APR Sept. 2020 Average APR April 2020
All Credit Cards 20.23% 20.19% 20.19%
Business Credit Cards 17.78% 17.78% 17.93%
Student Credit Cards 18.83% 18.83% 18.87%
Cash-Back Credit Cards 19.09% 19.11% 19.18%
Travel Rewards Credit Cards 19.20% 19.19% 20.11%
Secured Credit Cards 20.14% 20.14% 20.23%
Other 22.39% 22.15% 20.66%
Store Credit Cards 24.18% 24.16% 24.38%

What Happened in October 2020

October was another quiet month for credit card APRs. The Balance only recorded small interest rate adjustments for four cards:

  • Diamond Resorts World Mastercard: Variable purchase APR range is now 15.74%-24.99% (was 14.99%-24.99%)
  • Cabela’s Club Mastercard: Variable APR range for non-Cabela’s purchases is now 15.24%-26.99% (was 15.24%-24.24%) 
  • AvantCard: Variable purchase APR range is now 24.99%-25.99% (was 23.99%-25.99%)
  • Macy’s Credit Card: Variable purchase APR is now 25.24%, down from 26.74%
  • Macy’s American Express Card: Variable purchase APR is now 25.24%, down from 26.74%

New Credit Cards Added to Data Pool

The Balance also added five cards to our database in October, which was the primary reason for the slight average APR movement. We are now tracking interest rates, fees, rewards, and other details for these new products:

  • Venmo Credit Card
  • SoFi Credit Card
  • Hotels.com Rewards Visa Credit Card
  • Petal 1 Visa Credit Card
  • Wyndham Rewards Earner Plus Card

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

  • On average, these offers last about 12 months, which was the case since October 2019.
  • The longest introductory purchase rate offer is 20 months, which was offered by the U.S. Bank Visa Platinum Card. 
  • Cards with promotional purchase APRs charged an average ongoing rate of 18.21%.

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, as it had been since May. 

  • The average length of these balance transfer rate promotions is about 14 months, which was consistent with prior month averages.
  • The longest offer overall is 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, 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%.

Cash Advance Rates

Most cards allow you to tap your credit line by using the card to withdraw cash at an ATM. About 89% of the cards we track allowed cash advances. But that convenient feature will cost you. 

  • The average APR on cash advances was 25.37%, little changed since April.
  • The highest cash advance APR we found was still a steep 36%, 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 103 of the cards surveyed for this report (about 33%). The average penalty APR in our card sample was a steep 28.66%, 8.43 percentage points higher than the average purchase APR in October 2020, but the lowest average penalty APR recorded by The Balance since we began tracking rates in September 2019. 

The Balance observed penalty rate adjustments in August and September, as some issuers dialed back APRs that once exceeded 30%, but those rate changes have subsided.

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) have an average purchase APR of 23.74%, 4.53 percentage points above the average APR of cards marketed to those with good/excellent credit (19.21%) in October 2020.

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 numbers to watch, especially if you carry a balance month-to-month. 

The Balance found many banks are still 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. However, be mindful that even if your monthly credit card payments are deferred, those accounts are probably still accruing interest.

“Credit cardholders should be aware of how their payments will be impacted once the assistance agreement ends,” said financial attorney Leslie H. Tayne, founder and managing director of Tayne Law Group, a New York law firm focused on debt resolution. “If the creditor has lowered your interest rate, keep track of when your interest rate will return to normal. If your payments have been deferred, you may not be expected to make up your missed payments at the end of the term, but you’ll need to resume making payments, and your minimum payment may be higher than it was before the assistance term.”

If you’re not deferring credit card payments, prioritize managing the accounts and balances you may already have. Interest rates are pretty stable right now, but even single-digit APRs can balloon debt costs over time.  

“The greater your balance and the longer you hold onto it, the more you’ll pay in interest over time. Do your best to at least make your minimum payments on time every month,” Tayne said in an email to The Balance. “Consider cutting back in other parts of your budget, if you can, to make that happen, or keep balances as low as possible.”

Methodology

This monthly report was based on credit card offer data collected and monitored on a rolling basis by The Balance for 315 U.S. credit cards in October 2020. 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 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.