Current Credit Card Interest Rates

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The average credit card interest rate is 19.57%, down from a record-high 20.79% set on Aug. 14, 2024.

Current credit card interest rates

Bankrate Data Center

Since 1976, Bankrate has been the go-to source for personal finance data, publishing average rates on the most popular financial products and tracking the experience of consumers nationwide.

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Historical interest rates

How are credit card rates set?

The typical credit card rate formula is the Prime Rate plus a profit margin set by the card issuer. On average, this margin often runs between 12% and 13%. The Prime Rate is currently 6.75%. It’s typically 3 percentage points higher than the federal funds rate, which is set by the Federal Reserve’s Federal Open Market Committee.

Essentially, the federal funds rate is the interest rate that banks charge each other for short-term (generally overnight) loans. The Prime Rate is a benchmark for what banks charge their most creditworthy customers. It serves as a basis for many financial products.

Credit cards have a higher markup than other loans, such as mortgages and auto loans, because credit cards represent unsecured debt. That means they aren’t backed by an underlying asset such as a home or car that a lender can seize if the borrower doesn’t pay them back.

Have a question about credit cards? Get in touch with me at ted.rossman@bankrate.com. I’d be happy to help!

The CARD Act changed credit card rate calculations

The CARD Act, which took effect in 2010, altered the way credit card rates were set. Previously, credit card issuers had much more flexibility in terms of when they could change customers’ rates. Now, the easiest way for them to adjust rates (especially on existing balances) is to tie the rate to an index such as the Prime Rate.

If the Prime Rate changes, almost all credit card agreements are written in a way that the adjustment affects cardholders’ new and existing balances without any special notice required. The exact timing of the change varies. Sometimes the issuer uses the Prime Rate on your statement date. It might also be the first day of the month or the last day of the month or another date of their choosing.

Card issuers can change the rate on existing customers’ new purchases with 45 days’ notice. And they have a lot of flexibility regarding new offers just coming onto the market.

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How do credit card rates affect you?

Most credit cards bill on a monthly cycle. If you pay your credit card purchases in full, you aren’t charged interest and you typically receive an interest-free grace period of at least 21 days. For example, if your billing statement is generated on the 1st of the month, you usually have until at least the 22nd of that month to pay without interest accruing. Depending on when you made the purchase, you might actually have close to two months without owing interest (if you bought something early in the billing cycle).

However, if you carry a balance from one billing cycle to the next, it’s a completely different story. Credit card rates are usually expressed as APRs — annual percentage rates. But taking this a level deeper, what actually happens when you carry a balance is that the card issuer assesses a daily interest rate (typically the APR divided by the 365 days in a year) on your average daily balance during a given billing cycle. The most important thing for consumers to understand is that, when they carry balances, interest is accruing every single day (and usually at a hefty interest rate). That’s why it’s essential to pay down credit card debt as quickly as possible.

Let’s say you have $5,000 of credit card debt and your interest rate is 20% APR. If you only make minimum payments, you will be in debt for about 23 years and you’ll end up paying about $7,723 in interest, according to Bankrate’s calculator.

• Our methodology
  

  When we refer to the average credit card rate, we mean the average midpoint of the APR ranges assessed by 111 popular credit cards offered by the 50 largest U.S.-based credit card issuers. Most credit cards charge different interest rates to different customers based upon their creditworthiness. A consumer with an excellent credit score, for example, might be charged 14.99%. That same card might charge as high as, say, 24.99% to someone with a lower credit score. In that example, we would use 19.99% (the midpoint between 14.99% and 24.99%) in our average credit card rate calculations.