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After having “non-rev” privileges with Southwest Airlines, Christy dove into the world of points and miles so she could continue traveling for free. Her other passion is personal finance, and is a cer...
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Here at Upgraded Points, we’re firm believers in not carrying a balance on your credit cards. Interest charges can easily outweigh rewards, so paying your balance can maximize the benefits you receive. But if you’re like 25% of rewards credit cardholders,¹ you will probably carry a balance at some point.
Knowing your credit card’s APR and making sure you have the lowest APR is incredibly important. But 40% of Americans who carry a balance on their cards don’t know their credit card’s APR, according to a recent study by CNBC.²
So what is the average credit card APR and does it vary based on issuer, credit score, or card type? Use this article to see how your current (or potential) APRs compare and learn what you can do to lower your card’s APR.
Top 7 Facts About Credit Card Interest Rates
The average APR for new credit card offers was 16.15% in 2021 and was relatively flat throughout the year. The highest average APR was 16.22% and the lowest was 16.05%.³
If you are a borrower with a lower credit score, you haven’t benefited much from current historically-low interest rates. The average new card APR for subprime credit cards is now higher than it was before the pandemic — 25.8% in January 2022, compared to 25.37% in February 2020.³
Borrowers with good to excellent credit have seen APRs either stay steady (excellent credit) or drop 2.22% (good credit) in January 2022 compared to January 2021.⁴
Secured credit cards have seen the highest increase in APRs by card type, jumping up 1.12% in 1 year from January 2021 to January 2022. Business and store card APRs have also seen a significant average increase over the past year.⁴
While APRs have steadily increased since 2014, the pandemic brought about lower interest rates in 2020. This is expected to change in 2022 as the Federal Reserve is predicted to raise rates multiple times.⁵
Of the U.S. households that carry credit card debt, the average interest charges paid in 2021 were $1,029, down from $1,155 in 2020.⁶
According to the Fed, the percentage of people in Q3 2021 who are 30+ days late on their credit card payment (and thus accruing interest) fell from 1.58% to 1.57% in the third quarter of 2021, making it the lowest number since tracking began back in 1991.⁷
Why Your Credit Card’s APR Matters
Even if you plan on paying off your credit card in full each month and never carrying a balance, life happens! Being aware of the details of your card’s APR is important so you can minimize your interest costs.
To start, your Purchase APRis the standard APR that applies when you make purchases. This purchase APR can be either fixed or variable:
Fixed APR is locked in when you sign up for your credit card and won’t change except under very specific circumstances, such as making a late payment (triggering your penalty APR). Fixed APRs are rare.
Variable APR is more common. This APR can change over time and is usually based on a benchmark rate. For example, the prime rate plus 3.5%. When the prime rate increases or decreases, your credit card’s APR will change as well. We’ll discuss this in the next section.
Either way, interest payments can be small in the short term, but over the long run, they can add up to big fees and make it harder to pay down your card. For example:
If you have a $1,000 balance on your card that you pay over 6 months, you’ll spend $13 more in interest with a higher APR:
$39 in interest if your card has an 18.49% APR (the median APR if you have an “excellent” credit score)
$52 in interest if your card has a 24.74% APR (the median APR if you have a “fair” credit score)
If you have a higher balance and/or you take longer to pay off the balance, this adds up much quicker. The interest on a $10,000 balance that takes you 3 years to pay off will be $1,033 more with a higher APR:
$2,871 in interest if your card has an 18.49% APR (the median APR if you have an “excellent” credit score)
$3,904 in interest if your card has a 24.74% APR (the median APR if you have a “fair” credit score)
This shows that it’s always best to be aware of your credit card’s APR and try to get the lowest rate offered by your issuer.
Where Do I Find My Card’s APR?
So where do you find your credit card’s APR? You have a couple of options:
Monthly Statement — There will be a section of the statement marked “Interest Charge Calculation” or a similarly worded section near the end of your credit card’s monthly statement.
Credit Card Terms and Conditions — It will be located in the Schumer box within your card’s terms and conditions. Even if you didn’t keep your original paperwork, this can normally be found online by searching for your specific card.
Credit Card APR Trends
Tracking the average rate is important because most credit card issuers offer a variable APR — meaning the interest rates fluctuate with market conditions. While rates have fluctuated over the past 20+ years, rates have stayed between 12% to 16%, with the average interest APR at 13.26%.
It is important to point out that the Federal Reserve collects information on the APRs of credit cards issued to American consumers by commercial banks from non-reward and retail credit card accounts across all credit accounts (interest-bearing and non-interest-bearing). This average APR in the graphic above also factors in credit accounts that charge 0% introductory APR, for example.
For comparison’s sake, when you look at only accounts that assess interest (like your non-promotional APRs), the Federal Reserve rate averaged 16.45% for 2021. While credit card issuers set their own rates, they will generally use the Federal Reserve as a benchmark and add on a specific number of percentage points depending on the borrower’s credit.
Average Credit Card Interest Rates (By Card Type)
The average APR each card has depends on the type of card you have. In general, store cards have higher average APRs due to the lower requirements to qualify for the card (and therefore the higher risk to the card issuer).
Hot Tip: Each card’s APR will depend on your creditworthiness, so we’ve included both the average minimum and maximum APRs.
On the other hand, cards like secured cards offer lower APRs due to the lower risk associated with the cards. Rewards cards, including travel, airline, and hotel cards, fall somewhere in the middle.
According to U.S. News and World Report,¹ the following are the average APRs as of December 2021:
Type of Rewards Card
Average Minimum APR
Average Maximum APR
No annual fee
How does your credit card compare? If your APR is significantly higher than these averages, it might be a good time to give your card’s issuer a call to negotiate a lower APR.
Average Credit Card Interest Rates by Issuer
Each issuer sets the APRs for its credit card products. The issuers all have a slightly different risk-based pricing policy that guides the range of interest rates they advertise and offer to customers.
For example, Discover offers cards that have a much lower APR than its competitors — both in the lowest APRs offered and in the median APR across all cards. Barclays Bank and Capital One have a median that is higher than competitors, exceeding 20%. These issuers also have cards with the highest APRs offered, right around 25%.
Bottom Line: Issuer average APRs also tend to factor in credit score, since some cards are only available to those with good-to-excellent credit.
Available APRs by Credit Score
Credit score ranges as defined above are based on FICO’s credit score ranges:
Excellent — 740 to 850
Good — 670 to 739
Fair — 580 to 669
Bad/No Credit — 350 to 579
As we noted above, many cards are only available to those with good or excellent credit. In general, if you want to qualify for credit with a lower credit score, you’ll often have to pay the price by paying higher APRs. You can see this in the median APRs rising from 18.49% if you have excellent credit, 19.49% if you have good credit, and 24.74% if you have poor credit.
The outlier here appears to be the bad/no credit field, but keep in mind that most cards offered for people that fall within these credit score ranges are secured cards and/or cards with much lower credit limits. Both of these reduce the risk to the issuer.
Other Types of Credit Card Interest
We’ve mainly addressed purchase APR in this article, but there are other types of credit card interest you should be aware of. You can find all of your card’s APR in the same place as your purchase APR— in the Schumer box within the terms and conditions.
Average Penalty APR
If you’ve missed your payment’s due date, you could trigger your credit card’s penalty rate. This rate is more extreme than typical APRs (and can be as high as 29.99%, according to Experian) and will only be lowered back to your card’s standard interest rate after you’ve made 6 timely payments.
Introductory Period APR
An introductory period APR is an incentive offered by credit card companies to new applicants to give an especially low rate (usually 0%) for a certain time period once an account has been opened. According to Experian, the introductory period can last anywhere from 6 to 21 months but is usually around 10.5 months without interest.
Balance Transfer APR
The balance transfer APR is the interest rate you owe on balances transferred from loans or other credit cards to your credit card. For most balance transfer cards, you begin with a low rate for a number of months, usually 12 months, before the card transitions to a card with a regular APR for any remaining balance.
Cash Advance APR
This cash advance rate is applied when withdrawing money from an ATM or bank using your credit card.
Tips To Lower Your Credit Card’s APR
If you already have a credit card with an issuer and you’re hoping to get them to lower your existing APR, there are a few things you can do to renegotiate a lower rate. Reach out to your credit card issuer directly and ask if they’d be willing to negotiate a lower APR. Here’s some information to have on hand:
Show a Positive Payment History — Point out your track record of making on-time payments. Lenders are more likely to give you a lower APR (in addition to other benefits, like a bigger credit limit) if you’re a trustworthy borrower.
Show a Change in Credit Score — Maybe you started with good credit, but now have excellent credit. This is definitely a reason for an issuer to offer you a lower rate. Just be aware that to confirm your higher credit score, the issuer may need to run a credit check on you again!
Be Aware of Competitor Offers — Know what the competition is offering and use it to your advantage. Let your credit card company know that you’re searching for the best rate and be armed with the correct information.
If you’re in the market for a new credit card, the best thing you can do is to make sure your credit score is as high as possible. In order to do this, be sure to:
Monitor Your Credit Report — Check your credit reports regularly to make sure you’re accurately scored. You have the right to check your credit reports from each major credit bureau (Equifax, Experian, and TransUnion) for free through AnnualCreditReport.com.
Keep Debt Balances Low —Issuers want to know that you’re not over-extending yourself. Lenders look at the amount of credit you’re using compared to how much credit you’ve been given (also known as your credit utilization). Typically, the lower, the better, but try to keep it below 30%.
Show an Impressive Credit History — Lenders like to see that you have a long history with different types of credit, including revolving credit and installment loans. This means the average length of your credit history and the types of loans you’ve handled (which is known as your credit mix) are really important to lenders.
Now you know why your credit card’s APR matters and where your card stands against the competition. Factors including your credit score, card type, card issuer, and even the current interest rate climate all influence what APR you’re likely to get.
If your card has a higher-than-expected interest rate, try to negotiate a lower rate with your issuer. It’s also important to be aware of other APRs in case you need a balance transfer, miss a payment, or take advantage of an introductory offer on your card.
¹ U.S. New Staff (2021, December 1). Average Credit Card APR. U.S. News & World Report. https://money.usnews.com/credit-cards/articles/average-apr ² Fox, M. (2022, January 10). 40% of Americans with credit card debt don’t know their interest rate, survey shows. CNBC. https://www.cnbc.com/2022/01/10/40percent-of-americans-with-credit-card-debt-dont-know-their-interest-rate.html ³ Dilworth, K. (2022, August 31). Average credit card interest rates: Week of August 31, 2022. CreditCards.com. https://www.creditcards.com/news/rate-report/ ⁴ Comoreanu, A. (2022, July 18). Credit Card Landscape Report. WalletHub. https://wallethub.com/edu/cc/credit-card-landscape-report/24927 ⁵ Robertson, H. (2022, January 10). Goldman Sachs now thinks the Fed will hike rates four times in 2022 and start slashing its balance sheet in July. Insider. https://markets.businessinsider.com/news/stocks/federal-reserve-interest-rate-outlook-balance-sheet-reduction-goldman-sachs-2022-1 ⁶ Stolba, S. (2020, December 16). How Many People Have Credit Card Debt? Experian. https://www.experian.com/blogs/ask-experian/how-many-people-have-credit-card-debt/ ⁷ The Federal Reserve. (2022, August 22). Charge-Off and Delinquency Rates on Loans and Leases at Commercial Banks. https://www.federalreserve.gov/releases/chargeoff/delallsa.htm
Featured Image Credit: Upgraded Points
Frequently Asked Questions
Getting the best rate on a credit card is dependent on a few factors — mainly your credit score, which type of card you want to qualify for, and the card’s issuer. At the end of the day, if you have a high credit score, you will qualify for the best interest rates. The median APR for those with excellent credit is currently 18.49%.
While a 24.99% APR on a credit card isn’t bad (particularly for people with below-average credit), you can definitely find APRs lower than this. For example, the current average APR on a credit card is 16.15%.³
The average credit card interest rate across all issuers in 2022 is 16.13%. The Federal Reserve hasn’t released average APRs for 2022 yet, but in Q4 2021, the average rate was 16.44% for interest-bearing accounts and 14.51% across all accounts (including those with 0% promotional rates).
Credit card companies take on risk every time they allow you to spend money on your credit card since it functions as an unsecured loan. In addition, the lower your credit score, the higher the risk that you won’t repay this loan.
To compensate for this risk and stay competitive in the current market, credit card companies charge high rates of interest. Rates are especially high if you have lower credit or a history of financial problems in your past.
After having “non-rev” privileges with Southwest Airlines, Christy dove into the world of points and miles so she could continue traveling for free. Her other passion is personal finance, and is a certified CPA.