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The average credit card interest rate is 20.09%, down from the record 20.79% set on August 14, 2024.
Current Credit Card Interest
| 3 Month Trends | variable |
|---|---|
| 3/26/2025 | 20.09% |
| 3/19/2025 | 20.09% |
| 3/12/2025 | 20.09% |
| 3/05/2025 | 20.09% |
| 2/27/2025 | 20.09% |
| 2/19/2025 | 20.09% |
| 2/12/2025 | 20.10% |
| 2/05/2025 | 20.13% |
| 1/29/2025 | 20.12% |
| 1/22/2025 | 20.14% |
| 1/15/2025 | 20.15% |
| 1/08/2025 | 20.15% |
| 12/31/2024 | 20.27% |
| 12/24/2024 | 20.30% |
| 12/18/2024 | 20.35% |
| 12/11/2024 | 20.35% |
| 12/04/2024 | 20.37% |
| 11/20/2024 | 20.42% |
| 11/13/2024 | 20.35% |
How are credit card rates set?
A typical credit card rate formula is the prime rate and the profit margin set by the card issuer. On average, this margin is often performed between 12 and 13%. The prime rate is currently 7.5%. It is typically 3 percentage points higher than the federal fund rate set by the Federal Reserve Open Market Committee.
Essentially, federal fund rates are the interest rates banks charge each other on short-term (typically overnight) loans. Prime rates are the benchmark for what banks charge the most trustworthy customers. It serves as the basis for many financial products.
Credit cards have higher markup than other loans, such as mortgages and car loans, as credit cards represent unsecured debts. This means that if the borrower doesn’t pay it back, it is not supported by underlying assets such as a home or car that the lender can seize.
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Have a question about credit cards? Please contact me at ted.rossman@bankrate.com. I’m happy to help!
The credit card rate calculation has been changed in the card method
The Card Act, which came into effect in 2010, changed the way credit card rates are set. Previously, credit card issuers were far more flexible when it came to when they could change their customer rates. Now, the easiest way for them to adjust their rates (especially with their existing balances) is to tie the rates to indexes such as prime rates.
If the Prime Rate changes, almost all credit card agreements are written so that adjustments affect the new and existing balances of the cardholder without any special notice. The exact timing of changes varies. Publishers may use the Prime Rate for Voice Tomorrow. It could also be the first day of the month, the last day of the month, or another date they have chosen.
Card issuers can change the rate of new purchases for existing customers with a 45-day notification. And they have a lot of flexibility when it comes to new offers coming into the market.
How does credit card rate affect you?
Most credit cards are billed in a monthly cycle. When you pay in full credit card purchases, you will not receive any interest charged and will typically receive an interest-free period of at least 21 days. For example, if an invoice is generated on the 1st of a month, you will typically have to pay without interest until at least 22nd of that month. Depending on when you purchased your purchase, it actually lasts nearly two months without paying interest (if you bought something early in the billing cycle).
However, when you balance one billing cycle to the next, that’s a completely different story. Credit card fees are usually expressed as APRS (annual rate). But if you make this deeper, what happens when you actually carry balances is that the card issuer evaluates the daily interest rate (usually 365 days, divided by 365 days) on the average daily balance during a particular billing cycle. The most important thing consumers understand is that interest accumulates every day (and usually at a large interest rate) when carrying balances. Therefore, it is essential to repay your credit card debt as soon as possible.
Let’s say you have a $5,000 credit card debt and the interest rate is 20% APR. If you only make the minimum payment, Bankrate calculators say you will be in debt for around 23 years and will be paying around $7,723 in interest.
What are the types of interest rates for credit cards?
So far, we have focused on purchasing APRs. However, credit cards often have other interest rates for different types of transactions. Here are some common examples:
- Balanced Transfer APR: Interest borrowed on balances transferred from a loan or other credit card to the applicable credit card. Many cards start at a slow speed (0%) for the specified number of months before moving to regular APR.
- Introductory APR: This is an incentive offered by credit card companies to new applicants, offering particularly low rates for certain periods once an account is opened. This rate, which is often an introductory 0% APR, is consistently lower than the typical APR for each card.
- Cash Advanced APR: This fee applies when you withdraw money from an ATM or bank using your credit card.
- Penalty APR: If you miss the due date, you can apply a penalty APR. This interest rate is more extreme than a typical APR (which could be as high as 29.99 per cent) and is usually reduced to standard interest rates after six months of timely payments.
Our Methodology
When referring to average credit card rates, it means the average midpoint of the APR range rated on 111 common credit cards offered by the 50 largest US-based credit card issuers. Most credit cards charge different interest rates to different customers based on their creditworthiness. For example, consumers with a good credit score may be charged 14.99%. That same card could be as high as 24.99% for people with low credit scores. In that example, we use 19.99% (midpoint between 14.99% and 24.99%) in calculating the average credit card rate.
Additional Interest Resources
There are several resources that will help you better understand credit card interest rates. If you’re interested in learning more, I recommend reading below.
Other credit card options:
To see more surveys from the Bankrate team, visit the Credit Card Statistics Center.
