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The average credit card interest rate is 27.90%, according to Forbes Advisor’s weekly credit card rates report.
The Federal Reserve keeps tabs on the average interest rate that U.S. consumers pay for a variety of different financial products—credit cards included. In February 2024, the average credit card interest rate in the U.S. on accounts with balances that assessed interest was 22.63%, according to The Federal Reserve.
Of course, the annual percentage rates (APR) you pay on your own credit cards might not match up with the national average. Credit card APRs can vary widely based on a number of factors, from your credit score to your debt-to-income ratio and beyond.
Featured Intro APR Credit Cards
Average Credit Card Interest Rate by Card Type
The average overall APR across credit cards we track in our database is 27.90% this week, up from last week. Our overall average calculation includes airline, hotel, flexible rewards, cash back, 0% APR, balance transfer, student and business credit cards.
Methodology
Average credit card interest rates are calculated from a dataset of over 250 credit cards in the U.S. market. To calculate the average overall credit card interest rate, we use a subset of those cards—excluding business, student, secured and corporate cards. We calculate average rates for other card types using smaller, category-specific subsets.
Average Credit Card Interest Rate by Credit Score
Higher credit scores have the potential to help you qualify for lower interest rates on credit cards, loans, and other types of financing. As a result, a good credit score could save you money in many situations.
Bad credit scores, on the other hand, indicate higher risk for the credit card company. This status tends to translate into higher APRs for you as a cardholder. It’s not unheard of to encounter credit cards with APRs as high as 25% to 30%.
Exact interest rates on credit cards can differ from one company to another, and among individual cardholders as well. The type of credit card you open can play a role in your APR as well, with rewards credit cards often featuring higher interest rates than other types of credit card products.
Below is a look at the approximate APR range you might encounter on a general purpose credit card, according to your credit score. You should always check with the individual credit card issuer to confirm which rates are offered on any account you’re considering.
Read more: Credit Cards for Bad Credit
Source: The Consumer Credit Card Market Report, September 2021, Bureau of Consumer Financial Protection
How Your Credit Card Interest Rate Can Impact You
When it comes to interest rates, it’s always best to secure the lowest number possible. On paper the difference between a 23% APR and a 27% APR might not seem like that much. But if you revolve a balance on your credit card account, a lower interest rate could save you thousands of dollars. Below is an example.
Credit Card Interest Cost Comparison
As you can see above, your credit card interest rate can also impact how long it takes you to pay down your credit card debt. A lower APR can make debt elimination faster and less expensive.
Of course, the best way to manage credit cards is to pay off your balance in full each month. If you can develop this habit and avoid credit card debt in the first place, then the APR on your account shouldn’t have any impact on your budget. In fact, when you pay off your full statement balance on a monthly basis, you can avoid paying credit card interest altogether.
How To Lower Your Credit Card Interest Rate
If you’re working to pay down credit card debt, securing a lower interest rate could help you save money and get out of debt faster. Below are several strategies you can use to try to lower your credit card APR.
Balance transfer. You might be able to open a new credit card to take advantage of a low-rate or 0% APR balance transfer offer. Low introductory interest rates on balance transfer credit cards don’t last forever (typically 12 to 21 months). But if you can afford to aggressively attack your debt while the introductory APR is in place, you may be able to take a big bite out of your credit card debt, or perhaps pay it off in full.
A balance transfer calculator can help you factor in balance transfer fees, introductory rates, and more to add up your potential savings. It’s also wise to compare multiple balance transfer credit card offers to make sure you find the best deal and best fit for your situation. Keep in mind, you’ll typically need good to excellent credit to qualify.
Consolidation loan. Another possible way to reduce existing credit card debt is to pay it off with a debt consolidation loan. Depending on your credit rating, debt-to-income (DTI) ratio, and other factors, you may be able to take out a new personal loan with a lower interest rate than you’re paying on your credit card accounts.
A low-rate debt consolidation loan could save you money and speed up the debt elimination process. Plus, by consolidating your revolving credit card debt with an installment loan, you could reduce your credit card utilization rate and potentially improve your credit score at the same time.
Ask your credit card issuer. Your credit card APR isn’t carved in stone. So, you can ask your credit card issuer if it’s willing to reduce your credit card interest rate, and in some cases you might have success.
Let the card issuer know if you’ve seen credit card offers with lower interest rates that you’re considering. Having a history of on-time payments on your account and a good credit score could also work in your favor when making your request.
Pro Tip
Keep in mind that there are pros and cons to each interest-rate lowering strategy above. If you’re successful in lowering your credit card interest rate (especially with a balance transfer or consolidation loan), it’s essential to avoid increasing your credit card debt with future overspending. If you don’t adjust your budget and spending habits, you might find yourself in a worse financial situation down the road.
How To Improve Your Credit Score
Whether you’re trying to secure a low interest rate on a new credit card or you’re looking to lower the APR on an existing account, having a good credit score could give you an advantage. Good credit improves your odds of qualifying for new accounts and getting the best interest rates and terms that credit card companies have to offer.
In truth, it can take some time to go from bad or even fair credit to a good credit score. But there are actions you can take that might help you see credit score improvement sooner rather than later.
Check your credit reports. Knowing where you stand is critical when you’re trying to improve your credit. The good news is that checking your three credit reports from the major credit bureaus (Equifax, TransUnion, and Experian) is easy and free. Visit AnnualCreditReport.com to claim a free credit report from each bureau once a week.
Make a note of derogatory credit information. Once you have your credit reports in hand, go through them from top to bottom. Make a note of any negative information you find that could be hurting your credit scores. You may not be able to do anything about these issues until they eventually age off your credit report. But you can make a point to avoid repeating the same mistakes.
Dispute credit errors. As you go through your credit reports, list out credit reporting errors or signs of fraud you discover. The Fair Credit Reporting Act (FCRA) allows you to dispute any inaccurate information that shows up on your credit report with the appropriate credit bureau—Equifax, TransUnion, or Experian.
Pay down your credit card balances. Lowering your credit card balances, and your credit utilization ratio by extension, can be one of the most actionable ways to improve your credit score. Credit utilization is a major credit score factor—largely responsible for 30% of your FICO Score. When you have a low credit utilization ratio, it indicates that you’re at a lower credit risk.
Show positive payment history. The way you pay your credit obligations—on time or late—is the most important factor in determining your FICO Score. When you avoid late payments, you can set yourself up for success in terms of your credit score. Yet even the occasional delinquency on your credit report could be a major setback.
Consider opening new accounts. If you have a thin credit file or need to build credit for the first time, opening new credit accounts might benefit you. With no credit history, it can be challenging to qualify for certain loans or credit cards. But some options, like secured credit cards or credit-builder loans, might work well for you as long as you always pay on time. You can also think about asking a loved one to add you as an authorized user on an existing credit card account.
Add utility bills and other accounts to your credit reports. You may not be getting credit for all of the bills that you already pay on time when it comes to your credit scores. Certain types of accounts, like utility bills, mobile phone services, subscription services, and rent typically don’t appear on credit reports. However, you may be able to use third-party services, like Experian Boost, to share information about these accounts with one or more of the credit reporting agencies. Experian Boost is a free service. Others may charge fees. But they might be worth it (at least on a short-term basis) if you’re working to improve your credit to qualify for a better interest rate on a mortgage or some other type of financing product.
Pro Tip
You have many credit scores but only three credit reports. Focus on keeping your credit reports in good shape following good credit management habits. Then no matter which credit scoring model a lender uses to calculate your credit score, you should be happy with the results.
Find the Best Credit Cards for 2024
No single credit card is the best option for every family, every purchase or every budget. We’ve picked the best credit cards in a way designed to be the most helpful to the widest variety of readers.
Bottom Line
Improving your credit can make it easier to qualify for attractive credit card interest rates. But don’t be too discouraged if you need to up your credit score before you can qualify for the best deals available. As long as you pay your statement balance in full each month, you can enjoy the many benefits that credit cards have to offer without paying any interest fees—regardless of the current APR on your credit card account.
Frequently Asked Questions (FAQs)
How can you avoid interest on a credit card?
Most credit cards feature a grace period. If you make a habit of paying off your full statement balance each month during this grace period (aka on or before the due date on your credit card statement), you should be able to enjoy the benefits that your credit card account has to offer without paying high-cost interest charges.
What is the best 0% APR credit card?
There’s no such thing as a perfect 0% credit card for everyone. Instead, if you’re in the market for a credit card that offers 0% promotional APR on new purchases or balance transfers (or perhaps both), you should compare available offers and see which cards have features that seem like they would be the best fit for you.
The best 0% APR credit card offers typically have generous introductory APR periods of 15 months or more. Credit cards that feature lower balance transfer fees may also be a plus if you’re interested in using the new account to consolidate debt.
How does credit card interest work?
Before you borrow money from a credit card issuer, it’s important to understand how credit card interest works. You can typically avoid paying credit card interest if you repay your full statement balance by the due date every month.
If you revolve a balance on your account and only repay a portion of the money you borrow (e.g., the minimum payment or some other amount that’s less than your statement balance), you’ll generally owe your credit card company interest. Furthermore, as long as you keep an outstanding balance on your credit card account, you’ll continue to owe your credit card issuer interest month after month.
What is a good interest rate on a credit card?
A good interest rate on a credit card is an APR that’s lower than the national average credit card rate. But it’s important to point out that even a “good” credit card interest rate may not be all that great compared to other financing options.
Even if you have good credit, credit cards tend to be an expensive way to borrow money. By comparison, good and excellent credit borrowers can often find lower interest rates on personal loans, home equity loans, HELOCs, mortgages, and auto loans compared to credit cards.
Of course, the good news about credit cards is that you can avoid paying any interest to the card issuer if you manage the account responsibly. As long as you make a consistent habit of paying off your entire statement balance every billing cycle, you won’t owe interest charges—essentially making your interest rate irrelevant. But if you ever revolve a balance on your account from one month to the next, the interest rate on your credit card matters a great deal. High-interest credit card debt can cost you a lot of money in a hurry.
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