Average credit card interest rates: Week of September 13, 2023

The average credit card interest rate is 21.07 percent.

With federal rates stalled at a 22-year-high, APRs on most new credit card offers already tower well above the 10-year historical average of 16.43 percent. But with three more Federal Reserve meetings scheduled before 2024, it could still be awhile before card APRs peak.

According to CreditCards.com’s latest weekly rate report, a record share of online credit card offers — 52 out of 100 offers tracked weekly by CreditCards.com — currently start APRs at 20 percent or more.

Meanwhile, an overwhelming majority — 84 out of 100 offers — only offer APRs above 18 percent. Until last year, by contrast, the highest weekly APR average CreditCards.com had ever recorded was 17.8 percent.

But with at least one more impending rate hike from the Fed still possible, the share of cards charging APRs well above 20 percent could climb even higher.

As Fed officials weigh another rate increase, card APRs sit at record heights

Policymakers at the Fed are scheduled to meet again on September 19 and September 20 to discuss their next interest rate decision and are widely expected to leave the highly influential federal funds rate unchanged for the time being.

However, if policymakers decide instead to push up the central bank’s key rate for the 12th time since March 2022, cardholders could see APRs on both new and existing credit card accounts break even more records in the coming weeks.

Among the 100 cards tracked weekly by CreditCards.com, for example, a historic share — 37 out of 100 cards — currently cap APRs at 29.99 percent or more. But if the Fed announces another quarter-point rate hike, the share of cards with a maximum APR as high as 29.99 percent or higher could climb to 42 percent.

That would be a striking change from previous years when such high rates typically appeared only on notoriously expensive gas, retail and subprime credit cards.

Technically, credit card lenders don’t have to hike APRs on brand-new card offers when federal rates increase. But, historically, most do. For example, ever since Federal Reserve officials began their aggressive campaign last year to throttle inflation with higher rates, most lenders have followed the Fed’s lead and hiked new card APRs by the same amount. In addition, some lenders have opted to increase rates even more aggressively, outpacing federal rate hikes.

As a result, the average new card APR has climbed higher and faster in the last year and a half than it ever has before.

In March 2022, the average credit card offer advertised a starting APR of 16.17 percent and capped APRs at 23.69 percent. Today, just three out of the 100 cards tracked by CreditCards.com offer rates below 16.25 percent and only five advertise maximum APRs under 25 percent. Instead, most new card offers start APRS at 19.24 percent to 22.24 percent or more and cap them near 29 to 30 percent.

CreditCards.com only considers a card’s lowest available APR when calculating the national average. But with the exception of subprime and retail credit cards, the vast majority of new card offers advertise a wide range of potential interest rates — particularly on general market cards that appeal to a broad audience.

Although some applicants with the very highest credit scores may be assigned a card’s lowest possible APR, many others are instead assigned either a card’s maximum rate or an APR that falls directly in the middle of the two extremes.

Currently, the average maximum card APR sits at an all-time record high of 28.52 percent, while the average median card APR recently climbed to 24.80 percent.

After September, the Fed’s next rate-setting meetings are set for late October and mid-December and observers are split over the Fed’s likeliest next move. According to the CME Fed Watch tool, an increasing share of market observers predict the Fed will leave rates alone for the rest of 2023. However, a significant number still expect at least one quarter-point rate hike in either October or December. Meanwhile, a minority are predicting a rate cut by January.

With rates at record highs, calls grow for a nationwide rate cap

After 11 rate hikes from the Fed, lenders have repeatedly pushed boundaries for how much they can get away with charging on a new card.

Among the cards tracked by CreditCards.com, for example, a record number — 16 out of 100 cards — cap APRs above 30 percent. In March 2022, by contrast, only one out of 100 cards advertised rates that high.

But as new card APRs continue to climb to surprising heights, calls are growing for a nationwide rate cap that restricts how much lenders can charge.

On Wednesday, for example, Republican Sen. Josh Hawley introduced a bill that, if passed, would cap APRs on bank-issued cards at 18 percent. Currently, only cards issued by credit unions are limited to an 18 percent rate cap.

Similarly, Democratic Rep. Alexandra Ocasio-Cortez and Independent Sen. Bernie Sanders have previously proposed a 15 percent rate cap for credit cards.

Why interest rates are climbing

Most U.S. credit cards are tied to the prime rate, and when the federal funds rate changes, the prime rate typically changes by the same amount.

Lenders are free to set APRs on new cards as they wish and technically aren’t required to change the APRs when a card’s base rate changes. (On the other hand, lenders are required to match changes to the prime rate on open credit card accounts that are contractually tied to it.) Historically, most issuers do revise the APRs they advertise when the card’s base rate changes.

That’s what happened in the spring of 2020. After the Fed slashed rates by a point and a half in March 2020 in response to economic softening from the pandemic, nearly all of the issuers tracked weekly by CreditCards.com — with the notable exception of Capital One — lowered new card APRs as well.

Since then, most new cards included in this rate report continued to advertise the same APRs throughout the pandemic. As a result, the national average card APR hardly budged for nearly two years, remaining within a rounding distance of 16.00 percent for nearly 24 months.

But now that the prime rate is climbing, credit card offers are following suit. Current credit card holders will also see their rates climb, causing their debt to become much more costly to carry.

CreditCards.com’s Weekly Rate Report

Methodology: The national average credit card APR comprises 100 of the most popular credit cards in the country, including cards from dozens of leading U.S. issuers and representing every card category listed above. (Introductory, or teaser, rates are not included in the calculation.)

Source: CreditCards.com

Updated: September 13, 2023

Historic interest rates by card type

Since 2007, CreditCards.com has calculated average rates for various credit card categories, including student cards, balance transfer cards, cash back cards and more.

How to get a low credit card interest rate

Your odds of getting approved for a card’s lowest rate will increase the more you improve your credit score. Some factors that influence your credit card APR will be out of your control, such as the age of your oldest credit accounts. However, even if you’re new to credit or are rebuilding your score, there are steps you can take to secure a lower APR. For example:

• Pay your bills on time. The single most important factor influencing your credit score — and your ability to win a lower rate — is your track record of making on-time payments. Lenders are more likely to trust you with a competitive APR and other positive terms, such as a big credit limit, if you have a lengthy history of paying your bills on time.
• Keep your balances low. Creditors also want to see that you are responsible for your credit and don’t overcharge. As a result, credit scores consider the amount of credit you’re using compared to how much credit you’ve been given. This is known as your credit utilization ratio. Typically, the lower your ratio, the better. For example, personal finance experts often recommend that you keep your balances well below 30 percent of your total credit limit.
• Build a lengthy and diverse credit history. Lenders also like to see that you’ve successfully used credit for a long time and have experience with different types of credit, including revolving credit and installment loans. As a result, credit scores, such as the FICO score and VantageScore, factor in the average length of your credit history and the types of loans you’ve handled (which is known as your credit mix). To keep your credit history as long as possible, continue to use your oldest credit card, so your issuer doesn’t close it.
• Call your issuers. If you’ve successfully owned a credit card for a long time, you may be able to convince your credit card issuers to lower your interest rate — especially if you have excellent credit. Contact your credit card issuer and try to negotiate a lower APR.
• Monitor your credit report. Check your credit reports regularly to be sure you’re accurately scored. The last thing you want is for a mistake or unauthorized account to drag down your credit score. You have the right to check your credit reports from each major credit bureau (Equifax, Experian and TransUnion) once per year for free through AnnualCreditReport.com. The three credit bureaus are also providing free weekly credit reports through 2023 due to the pandemic.