What Is the Average Credit Card APR?

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Last updated on March 28th, 2023

Ever find yourself wondering what the average interest rate is on a credit card? Here are the average credit card APRs on different types of credit cards, and for different credit scores.

What Is APR?

First, what is “APR?” APR stands for annual percentage rate. APR is a basic formula that combines the U.S. Prime Rate and the issuing bank’s interest margin to show a cardholder how much they’ll owe if they don’t pay their statement balance in full each month.

The Prime Rate is the interest rate the Federal Reserve charges top clients for borrowing money. The Wall Street Journal publishes this rate, which the Fed updates regularly. Banks then extend credit lines to consumers and attach their own interest rates, known as a margin. Combining these two figures allows people to reach the APR. 

What Is the Prime Rate?

CURRENT PRIME RATE:

8%

How Does Knowing the Average APR of a Credit Card Help You?

Okay, so I can check out all the latest interest rate calculations here – so what?

Well, keeping up-to-date on the latest APR trends can help you when shopping for your next credit card. Knowing what the average interest rates are on different card types can let you better gauge if the offer your bank gives you is fair, what other applicants with a similar credit profile to yours are getting, and if it’s time to ditch your current issuer for an exciting new offer elsewhere!

What Is the Average Credit Card APR By Credit Score?

Those with better credit scores can expect lower interest rates. This statement holds up in almost every aspect, but statistics show that those with average (or fair) credit scores pay higher interest than those with bad credit or no credit. But why?

The reason for the higher APR for fair credit vs. bad credit has to do with the type of interest rates these cards offer. “Bad credit” cards usually have a fixed-rate APR. This static rate means issuers can offer a set rate for a wide range of credit scores at the same time. Those with no credit or a poor credit score often get secured cards. Cards that require a deposit feature a fixed APR.

People with fair credit scores have better access to quality cards. Because of this, they usually receive cards with a variable APR. But, since their credit score is subprime, they still receive worse offers than those with good or excellent credit.

Score APR
Excellent Credit 14.24%
Good Credit 19.24%
Average Credit 24%
Bad Credit 29.74%
No Credit 27%

Average APR by Card Deposit Type

The difference between unsecured cards and secured cards is similar to the variations by credit score. Better credit scores receive variable interest rates, with better scores getting a lower interest rate. Secured cards typically offer fixed rates, on the other hand. Secured cards also provide collateral, making banks more willing to offer lower rates.

Unsecured

27.2%

Secured

24.1%

Average APR by Card Type

Student cards offer highly competitive APRs because they provide smaller credit limits. Credit unions, on the other hand, provide exceptional value since they are member-owned and operated. Where larger banks use profits to satisfy shareholders through dividends or other investments, credit unions are not-for-profit companies. This status means that profits go directly back to members – providing them with unbeatable APRs.

0% APR

18.9%

Balance Transfer

18.5%

Business

19.5%

Credit Union

18.1%

Low APR

17.9%

Student

19.9%

Average APR by Credit Card Rewards

Rewards credit cards offer higher interest rates versus balance transfer cards or low APR cards. Higher rates are due to the value of the points or miles on offer. Because of the larger APRs, these cards are poor choices for carrying a balance. Without a 0% rate intro offer on purchases or balances, applicants should be wary about carrying a balance. Instead, pay the full statement balance each month and avoid interest building up.

Airline

20.1%

Auto

23.1%

Cash Back

22.7%

Crypto

23.2%

Dining

23.1%

Dining

22.4%

Hotels

22.4%

Retail

25.7%

Travel

22.3%

Different Types of APR

The above figures cover the purchase APR. This figure is the interest rate cardholders pay when they have a statement balance. There are other types of APR, however, including:

FAQs About APR

  • Each issuer has a differing repayment model, but generally you can expect your minimum payment to be heavily influenced by your APR, total balance, and any fees.  It therefore follows that if you want a lower monthly payment, you should try lowering your APR by boosting your credit score. 
  • APR is the cost of borrowing on your credit card. The term refers to the yearly interest rate you’d pay if you carry a balance, and it often varies from card to card. That is the easiest way to view your APR.
  • The cash advance APR is the interest rate an issuer charges when you use the card to withdraw cash – in much the same way you would at an ATM.  Cash advance APRs tend to be higher than purchase or balance transfer rates.
  • Balance transfer APR refers to the interest rate charged when transferring other card balances to another credit card. Balance transfers often charge a fee of $5 or 3% of the transaction, whichever is greater, and feature an APR the same (or nearly the same) as purchase APR.
  • A high interest rate is simply any credit card with an APR higher than the averages listed above. A low interest credit card – or low APR credit card – is any card with an APR lower than the average rates above.
  • Your APR may increase if you do not make your regular payments. Additionally, missing payments will result in negative comments on your credit file, in turn lowering your credit score. Missing payments can lead to fees, account closure, wage garnishing, and more.
  • No. APR refers to Annual Percentage Rate, or the repayment rate of your credit card., APY refers to Annual Percentage Yield and refers to the yearly return on savings or checking accounts. Credit cards do not pay interest, so APY does not apply. Instead, they charge interest, so require APR.
  • For more information about building credit and lowering your APR, check out our handy resources here.
  • A high APR can lead to further debt without careful money management. High APR means higher minimum payments and the chance of missing payments.
  • The highest credit card APR is the PREMIER Bankcard®, with a fixed APR of 3^.

Featured image by 3844328 /PixaBay

About: Cory
Cory Santos

Cory is BestCards.com's "Jack of all trades" and resident credit expert, covering all facets of the credit card space. Cory holds academic degrees in both the U.S. and U.K. In addition to credit cards, Cory finds that jogging, cats, and memes are essential parts of a balanced day.

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