Average Apr for Credit Cards: Types, Costs, and Trends

The average APR for credit cards can vary significantly, depending on the type of card and the issuer. For cash back credit cards, the average APR is around 19.8%.

Some credit cards, like those for people with poor credit, come with much higher APRs, often above 30%. This is because the issuer is taking on more risk by lending to someone with a lower credit score.

The average APR for balance transfer credit cards is around 16.3%, making them a more attractive option for people looking to consolidate debt.

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Your APR is the rate at which your credit card balance accrues interest, expressed as a percentage of your total balance over a year.

APRs can be fixed or variable, and some cards come with special promotional APRs with low rates lasting a specific period of time.

Most credit cards have variable APRs that fluctuate with a particular benchmark, such as the prime rate, which can add up quickly.

As of September 2024, the average APR of credit cards tracked in Investopedia's database was 24.74%.

Your APR is calculated by dividing your daily periodic rate by the number of days in a billing period, and then multiplying that rate by the amount of your credit card balance that's subject to interest.

To give you an idea of how quickly interest can add up, a daily periodic rate of .05479% (which is equivalent to an APR of 20%) can result in significant interest charges over time.

The good news is that you're only charged interest if you don't pay your bill in full each month, and there's a small window of time when the credit card issuer doesn't charge interest, known as the grace period.

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Credit card companies use a few key factors to determine your APR, which can have a big impact on how much interest you'll pay on your balance.

Your credit history plays a big role in determining your APR. A higher credit score can often help you qualify for a lower APR. For example, a particular credit card might offer APRs of 17.24% to 28.24%, depending on the borrower's credit rating.

The prime rate also influences your APR. Most credit cards have a variable APR that depends on the U.S. prime rate, which is based on the federal funds rate controlled by the Federal Reserve. If the Federal Reserve raises or lowers interest rates, expect your credit card's APR to move accordingly.

Some credit cards have fixed APRs that stay the same regardless of the prime rate. Other credit cards, like rewards credit cards, often have higher APRs since they offer more value.

Here's a breakdown of the key factors that determine your APR:

There are several types of APRs to be aware of when using a credit card. Introductory APRs are a special rate, often 0%, that's only temporary.

Purchases, balance transfers, and cash advances all have their own APRs. Purchase APR applies to purchases made throughout the month, while balance transfer APR is for balances transferred to another credit card. Cash advance APR is typically higher than purchase APR.

Here are some common types of APRs:

There are several types of APRs that can affect your credit card balance. Each type of APR has its own unique characteristics and implications for your finances.

The most common types of APRs include purchase APR, balance transfer APR, cash advance APR, and introductory APR. These APRs can vary significantly depending on the type of credit card you have and your creditworthiness.

A purchase APR applies to purchases you make on your credit card throughout the month and don't pay off by the payment due date. This is the standard APR you'll see on most credit cards.

A balance transfer APR is a higher rate that applies when you move a balance from one credit card to another. This rate is usually higher than the purchase APR and can vary depending on the credit card issuer.

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Cash advance APRs are even higher and apply when you borrow money from your credit card balance using an ATM. This rate is typically higher than the purchase APR and can be a costly way to access cash.

Introductory APRs are special rates that are offered for a limited time, often 0% APR, to attract new customers. These rates are usually only available for a short period, such as 6-12 months, and can be a great way to save money on interest charges.

Here's a breakdown of the different types of APRs and their average rates:

If your APR is significantly higher than these averages, it might be a good time to give your card's issuer a call to negotiate a lower APR.

Fixed-rate credit cards have the same APR the entire time you hold the card, which can be beneficial when interest rates are low as it allows you to lock in a low rate.

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You can find fixed-rate credit cards with major credit card issuers, but it's more likely to find them with credit unions and local banks.

A variable-rate credit card, on the other hand, has an APR that's tied to a particular index, often the prime rate set by the Federal Reserve.

The prime rate can fluctuate, causing the APR to change as well. For example, if the prime rate is 8.5%, a card company might add 10 to 12 percentage points for those with good credit, resulting in an APR between 18.5% and 34.5%.

Fixed rates can change in certain situations, such as being more than 60 days late with a payment, completing a debt management program, or ending a promotional fixed rate.

Here are some key differences between fixed and variable rates:

The average credit card balance is around $5,910, according to a 2023 Experian report. This can lead to a significant amount of interest paid over time.

Credit card interest charges can be much higher than other types of financing, often reaching as high as 24.74% as of September 2024, according to Investopedia's database. This can greatly impact a consumer's ability to repay what was borrowed.

Paying just the minimum payment can result in carrying over a balance, which can lead to much deeper debt than intended, with interest charges adding up quickly. For example, if you have a $500 credit card bill and pay the minimum, you'll still owe $470, and if you carry this over to the next billing cycle with a 20% interest rate, you'll have $94 added to your bill in interest.

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The average credit card balance is around $5,910, and if you pay only $200 on your card each month with a 20% APR, you'll pay over $2,296.74 in interest to become debt-free.

You'll pay most of your monthly payments towards interest if you don't pay your purchases off by the due date. Credit card interest can greatly impact a consumer's ability to repay what was borrowed.

Paying just the minimum payment can result in much deeper debt than the borrower intended, with each month's balance carried beyond the due date, interest is charged. Credit cards should only be used for things you already have the money for.

Paying the minimum payment will still result in interest charges, even if you pay the exact amount required. For example, if you have a $500 credit card bill and pay the $30 minimum, you'll still owe $470, and if you carry this over to the next billing cycle with a 20% interest rate, you'll have $94 added to your bill in interest.

The interest charged on credit cards can vary, but the average credit card interest is around 24.74%.

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If you're late on a payment, you'll be charged a penalty APR, which is a rate even higher than your card's default. This can be as high as 29.99%.

The CARD Act allows credit card issuers to raise your APR if you're more than 60 days late on payments during the first year of your account. This can happen quickly, so it's essential to stay on top of payments.

A typical penalty APR is 29.99%, which is much higher than the average APR. This rate will only be lowered back to your card's standard interest rate after you've made 6 timely payments.

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The average APR for credit cards varies widely, but it's essential to know what it means and how it affects your finances. According to the Federal Reserve data, the average rate on a credit card as of November 2023 came in at 21.47%. This is a benchmark to help you determine if you're being charged a reasonable rate.

The APR is the rate at which your credit card balance accrues interest, and it's expressed as a percentage. This means that if you carry a balance on your credit card, you'll pay a certain percentage of the outstanding balance as interest.

To calculate the amount of interest you'll actually pay, you need to know the daily periodic rate, which is your APR divided by 360 or 365. For example, with an APR of 20%, your daily periodic rate could be 0.05479%.

Here are some key facts to keep in mind:

It's essential to understand how APR works and how it can affect your finances. By knowing your credit card's APR and ensuring you have the lowest APR, you can save money on interest charges and make your credit card debt more manageable.

You can lower your APR by showing a positive payment history and making on-time payments.

To get a lower APR, reach out to your credit card issuer directly and ask if they'd be willing to negotiate a lower rate. Show them your track record of making on-time payments, as lenders are more likely to give you a lower APR if you're a trustworthy borrower.

A change in credit score can also be a reason for an issuer to offer you a lower rate. If you've started with good credit but now have excellent credit, point this out to your issuer.

Be aware of competitor offers and use them to your advantage. Let your credit card company know you're searching for the best rate, and be armed with the correct information.

To monitor your credit report, check your credit reports regularly to ensure you're accurately scored. You have the right to check your credit reports from each major credit bureau (Equifax, Experian, and TransUnion) for free through AnnualCreditReport.com.

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Keeping debt balances low is also important. Lenders look at the amount of credit you're using compared to how much credit you've been given (also known as your credit utilization). Typically, the lower, the better, but try to keep it below 30%.

A long history with different types of credit, including revolving credit and installment loans, can also help you get a lower APR. Lenders like to see that you have a diverse credit mix, which includes the average length of your credit history and the types of loans you've handled.

Here are some tips to keep in mind:

Your credit score plays a huge role in determining the APR you'll qualify for on a credit card. If you have an excellent credit score, you can expect an APR between 20.49%-27.49%.

The APR range varies based on your credit score, with good credit scores falling between 19.49%-28.49%. Fair credit scores, on the other hand, can expect an APR between 24.62%-29.99%.

Here's a breakdown of the APR ranges by credit score:

Keep in mind that these are average APR ranges, and actual rates may vary depending on the credit card issuer and other factors.

Store cards have higher average APRs due to the lower requirements to qualify for the card and the higher risk to the card issuer. This can result in APRs as high as 24.66%.

Rewards cards, including travel, airline, and hotel cards, fall somewhere in the middle in terms of APR. For example, airline cards have an average maximum APR of 23.84%.

Secured cards offer lower APRs due to the lower risk associated with the cards. In fact, secured cards have an average maximum APR of only 19.29%.

If you have a store card, it's essential to be aware of the potential high APR and make timely payments to avoid further interest charges.

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Your credit score plays a huge role in determining the APR on your credit card. FICO's credit score ranges are a good place to start, with excellent scores ranging from 741 to 850.

If you have an excellent credit score, you can expect to receive an APR between 20.49% and 27.49%. This is a relatively low range, making it a great incentive to maintain a good credit score.

For those with good credit scores, the APR range is slightly higher, spanning from 19.49% to 28.49%. This is still a decent range, but it's essential to keep in mind that rates are increasing overall.

Fair credit scores, on the other hand, come with a higher APR range of 24.62% to 29.99%. This is a significant increase, making it crucial to work on improving your credit score to qualify for better options.

The bad/no credit field has a median APR of 26.99%, which is the highest among all credit score ranges. However, it's essential to note that most cards offered to people with bad credit are secured cards or have lower credit limits, reducing the risk to the issuer.

Here's a breakdown of the average APRs by credit score range: