The average credit card interest rate is 16.12%
The national average credit card APR rose again this week, according to the CreditCards.com Weekly Credit Card Rate Report.
The average APR for brand-new cards ticked up to 16.12% after the retailer L.L. Bean increased the minimum APR on its co-branded card, the L.L. Bean Mastercard, by a full percentage point. The lowest rate that outdoor recreation enthusiasts can get on L.L. Beanâs retail rewards card is now 14.99%.
L.L. Bean also increased the cardâs maximum APR by four percentage points, causing the range of possible APRs that L.L. Bean fans can expect to substantially expand. For example, qualifying applicants with the lowest credit scores may be assigned an APR as high as 23.99%, which is nine points higher than the cardâs minimum rate. Previously, the difference between the L.L. Bean cardâs lowest possible rate and its highest rate was just six percentage points.
L.L. Beanâs rate hike also caused the average maximum card APR to rise this week. According to CreditCards.comâs latest rate calculation, for example, the average U.S. credit card now advertises a maximum APR of 23.62%, up from an average of 23.58% last week.
Every week, CreditCards.com tracks APR advertisements for a representative sample of 100 U.S. credit cards.
To calculate the national average credit card APR, we only consider a cardâs lowest possible interest rate. However, most U.S. credit cards advertise a wide range of possible rates, including maximum interest rates that are often 5 to 10 points higher than a cardâs minimum rate.
Credit card lenders donât typically advertise how many of their applicants qualify for a cardâs lowest rate. But generally, lenders typically reserve their lowest rates for just a small fraction of applicants. Meanwhile, others are assigned APRs that are far higher than the advertised minimum.
For example, credit card applicants may be assigned a cardâs lowest advertised rate or its highest. Or they may be assigned an APR that falls somewhere in the middle of a cardâs lowest and highest interest rates. As a result, even cardholders with good to excellent credit may be assigned an APR that is several points higher than the national average.
According to CreditCards.comâs data, for example, the average median card APR â which is the middle rate that many new cardholders are assigned â is currently 19.87%. Thatâs nearly four points higher than the average minimum credit card APR.
Average rates on new card offers are higher now than they have been in months. However, compared to a year ago, average card APRs are still unusually low â particularly compared to the past three years.
The average minimum credit card APR, for example, is currently down by 1.19 percentage points compared to a year ago when the average new card offer advertised a 17.31% interest rate. In February 2018, the average new card APR advertised a 16.41% interest rate.
The last time average minimum card APRs hovered closer to 16% was in 2017.
This yearâs lower interest rates are largely due to rate cuts by the Federal Reserve. When the Federal Reserve revises its benchmark interest rate, the federal funds rate, most credit card issuers eventually match the Fedâs rate change by revising new card APRs by the same amount.
In March 2020, the Fed slashed its benchmark interest rate, the federal funds rate, to near zero effectively erasing several years of gradual rate increases that the Fed had implemented between 2015 and 2016. As a result, the national average card APR tumbled dramatically last spring as the majority of lenders tracked by CreditCards.com matched the Fedâs rate cuts.
Since then, average card APRs have remained near a three-year low, staying within rounding distance of 16% for 10 straight months.
See related:Â How do credit card APRs work?
|Avg. APR||Last week||6 months ago|
|Methodology: The national average credit card APR is comprised of 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.)|
|Updated: February 3, 2021|
Some credit cards charge even higher rates, on average. The type of rate you get will depend in part on the category of credit card you own. For example, even the best travel credit cards often charge higher rates than basic, low interest credit cards.
CreditCards.com has been calculating average rates for a wide variety of credit card categories, including student cards, balance transfer cards, cash back cards and more, since 2007.
Your odds of getting approved for a cardâs 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 length of time youâve been handling credit.
However, even if youâre new to credit or are rebuilding your score, there are steps you can take to ensure a lower APR. For example: