The average annual percentage rate (APR) for credit cards where the user has a balance is 22.63% as of February 2024, according to the most recent numbers from the Federal Reserve.
But the average credit card APR isn’t necessarily the rate you’ll get when you open a card. Instead, applicants’ credit scores help determine credit card interest rates. Consumers with higher credit scores are likely to receive better rates than consumers with lower scores.
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Credit Score Credit Score ranges are based on FICO® credit scoring. This is just one scoring method and a credit card issuer may use another method when considering your application. These are provided as guidelines only and approval is not guaranteed.
Excellent, Good
What is a credit card APR?
A credit card APR, which is the same as a credit card interest rate, reflects the cost of borrowing money with your card if you carry a balance.
Typically, credit card APRs are variable, which means they can change under certain circ*mstances. Variable credit card APRs often adjust in tandem with a benchmark called the prime rate.
In the fine print of your credit card, you’re likely to see mention of the prime rate, and you can also expect to see a few APRs listed.
Types of credit card APRs
If you carry balances on your credit card, you may be charged different interest rates depending on the types of transactions you make. The five main types of credit card APRs are:
- Purchase APR: You use your credit card to make purchases and then, ideally, you pay off the full card balance each month. If you do not pay off your full balance by the due date, the issuer will usually charge the purchase APR on the amount that remains.
- Balance transfer APR: You may decide to transfer debt from one credit card to another in order to save money on interest. Your issuer will typically charge the balance transfer APR on this debt starting the same day you make the transfer. This rate may be the same as the purchase APR, and you’ll also usually pay a balance transfer fee.
- Cash advance APR: You can withdraw cash with your credit card in exchange for a high APR (often 29.99%) and a fee. You can expect interest to start accruing the day you make the transaction, and you’ll continue to be charged interest until you pay off the balance.
- Penalty APR: Your card may impose a higher APR as a consequence of missing a payment or having a payment returned. That penalty APR is often 29.99%. It can expire after a set period as long as you make on-time payments, or your issuer can impose it indefinitely.
- Introductory APR: Some cards offer new cardholders 0% APRs on purchases and/or balance transfers for periods of up to 21 months after the account is opened. Cards may also offer limited-time reduced APRs on eligible transactions.
What is the impact of credit score on APR?
Your credit score is key among the factors affecting credit card APR. Consumers with higher credit scores can expect to unlock lower credit card APRs. However, your score does not have to be perfect to reap benefits.
Many credit card terms and conditions say “creditworthiness” influences APR. Your credit score is a key part of your creditworthiness, though issuers may dig deeper into your financial history and consider factors such as your debt-to-income ratio as well.
The type of credit card you have may affect your APR. For example, secured credit cards tend to charge the same APRs to all cardholders, while unsecured cards often offer different rates depending on consumers’ credit scores. For their part, credit union credit cards can have lower interest rates than bank-issued cards.
How to negotiate a lower APR
Reducing your credit card APR by even a couple of percentage points can save you money as you pay off credit card debt. Your credit card issuer may be willing to make a rate reduction happen — if you ask.
To request a lower APR, you can call your card issuer’s customer service department. A history of on-time payments may help you make your case. Before you call, you can also use credit card pre-qualification to get a sense of the kinds of rates you could get with your credit profile. If those rates are lower than the one on your card, you may be well-positioned.
Once you’re done negotiating, make a plan to pay off your credit card debt. You may want to consider a credit card with a 0% introductory offer on balance transfers to knock out your balance faster.
Frequently asked questions (FAQs)
The Federal Reserve periodically publishes the average interest rate for credit card accounts and the average interest rate for credit card accounts where the user has a balance. The Fed uses a sample of about 50 banks that issue credit cards to make its calculations.
Yes, you can expect a good credit score to help you unlock lower interest rates than those available to consumers with weaker credit scores.
If you carry balances on your credit cards, a higher APR will make that debt more expensive. If possible, you should always pay your credit card balances in full every month. If you do this, your credit card APR will not affect your finances.
