Average Credit Card Interest Rates Stabilized in December 2019
APRs inched down as credit card balances reached new record high
This post is for historical reference. Specific product rates may have changed since publication. Please see banks' sites for current rates.
The average credit card interest rate was 21.26% in December 2019, up a mere 0.01 percentage point from the previous month, according to data collected by The Balance.
Average interest rates were largely unchanged as the Federal Reserve held off lowering rates in December 2019. Prior to December, The Balance saw credit card annual percentage rates (APRs) inch down across the board as issuers responded to three consecutive rate cuts that began in August. Some banks were slow to respond to the Fed actions and made rate adjustments accordingly in December. Meanwhile, other banks changed course and nudged APRs up as 2019 came to an end.
- The average APR on credit card purchases was 21.26%.
- Store credit cards had the highest average interest rate.
- Business credit cards had the lowest average interest rate.
- Cash-back credit cards had the lowest average interest rate among consumer cards.
Card type is just one factor that determines a credit card interest rate. To learn how we categorize cards based on type for this report, see 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).
Seasonal Rate Focus: Balance Transfer APRs
In December 2019, most credit cards (about 75% of all cards in the database) allowed cardholders to request balance transfers, and more than a quarter (about 29%) offered introductory balance transfer rates.
Most cards touting promotional balance transfer rates gave cardholders at least one year to pay off a balance transfer under a significantly reduced or 0% APR, and some cards offered even more time than that. Only six cards in the survey advertised promotional balance transfer rate offers that lasted less than 12 months.
Overall, the average length of balance transfer rate promotions was about 14 months.
Average Interest Rates by Credit Card Transaction Type
In addition to balance transfers, credit cards can be used to make cash advances, and, of course, purchases. In December 2019, APRs varied depending on the transaction type.
Purchase APR Deals
Purchase APR deals were common: More than one-quarter of the cards surveyed for this report offered new cardholders introductory purchase APRs.
- On average, these offers lasted about 12 months.
- The longest introductory purchase rate offer was an impressive 36 months.
- Cards with promotional APRs on purchases charged an average ongoing rate of 19.29%.
Cash Advance Rates
Of the cards we tracked in December 2019, 87% allow cash advances.
- The average APR on cash advances was 26.23%.
- The highest cash advance APR we found was 36%.
Penalty Interest Rates
Not all credit cards charged penalty rates in December 2019, but many did, including 106 of the cards surveyed for this report (about 35%). The average penalty APR in our sample of cards was a steep 29.10%. To make matters worse, The Balance found penalty rates were as high as 31.49%.
What Has Changed: Delayed APR Changes, Card Offer Adjustments
The Balance recorded a few notable card offer changes between Dec. 1 and Dec. 31, 2019:
Delayed Responses to Fed Rate Cuts
Up until a few months ago, the Fed slowly increased its federal funds rate (which impacts the variable APRs of financial products like credit cards) while the U.S. economy recovered from the financial crisis that started in 2007. Starting on Aug. 1, 2019, the Fed made three 0.25-percentage-point rate cuts in three months. The Fed left the baseline rate unchanged in December.
However, some card issuers continue to tweak rates. While many card issuers responded quickly to Fed rate cuts and adjust card APRs accordingly, others took their time. The Balance found 12 issuers lowered standard APRs by 0.25 percentage points on some or all cards Dec. 1-31, 2019, to catch up with previous Fed rate changes: Bank of America, Comenity, Commerce Bank, Credit One, Merrick Bank, Navy Federal Credit Union, Pentagon Federal Credit Union, Petal, Synchrony Bank, TD Bank, USAA, and U.S. Bank.
Slight APR Increases on Some Cards
Outside of the federal funds rate adjustments, The Balance noticed some cards ended the year on a higher note. A handful of credit card issuers—Discover, Pentagon Federal Credit Union, and U.S. Bank—raised the purchase APRs of some of their cards.
U.S. Bank made the largest and greatest number of APR changes in December 2019, and raised rates a half a percentage point on five cards and pumped up the range on another by 0.5 to 1.5 percentage points.
Pentagon Federal Credit Union bumped up the low end of the APR range for the PenFed Promise Visa Card half a percentage point. And Discover reworked the APRs of two cards (The Discover It Cash Back and the Discover it Chrome for Students) completely, which meant consumers with good credit no longer had access to a lower APR if they were approved for either card.
This monthly report was based on credit card offer data collected and monitored on a rolling basis by The Balance for 303 U.S. credit cards Dec. 1-31, 2019. Our data pool included offers from 42 issuers, including the largest national banks. We tracked 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. 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.
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.