The average credit card interest rate in 2023

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  • The average credit card interest rate was 20.40% in the fourth quarter of 2022, according to data from the Federal Reserve.
  • The type of card and your credit score will affect the interest rate you pay on any balance.
  • Higher credit scores mean lower interest rates, and reward cards have the highest interest rates.
  • Read Insider’s guide to the best low interest credit cards.

The average credit card APR was 20.40% in the fourth quarter of 2022, according to data from the Federal Reserve. But, your own credit card interest rate is likely to be different.

Credit cards come with a cost of borrowing: an annual percentage rate, or APR. This is the amount you will pay for the credit. With a credit card, you will only pay interest on an outstanding balance after the end of your billing cycle. Pay off your card in full each month and you won’t pay any interest.

However, if you don’t pay off your entire balance each month, it can get expensive. It’s not uncommon for a card to have an APR in the 20% range, which means a balance can continue to grow and snowball for each month it remains on your card.

Besides paying off your card, a few factors can affect the rate associated with your card, including your credit score and the type of card you have. Here’s how these factors influence your interest rate.

Insider Featured Cash Back Credit Cards

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Earn 5% cash back on everyday purchases at different places each quarter like, grocery stores, restaurants and gas stations up to the quarterly maximum when you activate. Automatically earn unlimited 1% cash back on all other purchases.

Unlimited Cashback Match – Discover will automatically match any cashback you’ve earned at the end of your first year

Earn 2% on every purchase with unlimited 1% cash back when you buy, plus an additional 1% when you pay for those purchases.

Introductory APR of 0% for 18 months from the date of the first transfer for balance transfers made within 4 months of account opening, then variable APR from 18.49% to 28.49%

Earn unlimited 2% cash rewards on your purchases.

$200 cash rewards bonus after spending $1,000 on purchases within the first three months of account opening

Interest rate by credit score

Like getting a loan, the interest rate attached to your credit card depends largely on your credit score. Credit scores are calculated based on your past credit activity on a scale of 300 to 850 based on past borrowings, repayment history, available credit, and your combination of credit accounts.

Lenders use them to gauge how trustworthy you are as a borrower and whether they should lend you, so generally the higher your credit score, the lower your credit card interest rate. . Those with higher credit scores will also be more likely to qualify for cards with 0% introductory interest rates.

Higher credit scores lead to lower interest rates

According to data from the latest CFPB Consumer Credit Card Market Report, the average total interest paid by consumers increases with lower credit scores.

The CFPB measures this with an effective interest rate – calculated as the total amount of interest charged per year divided by the total balance at the end of the cycle – to create a measure of the amount of interest actually paid by consumers at each level of credit. Data from 2020 showed that consumers with the best credit paid the lowest effective interest rates, and vice versa.

Interest rates by type of credit card

Premium credit cards tend to have a higher APR.

The type of card you have can affect how much interest you might pay if you have a balance. Data from S&P Global shows that for three main types of credit cards, a higher interest rate comes with greater benefits.

Some of the branded rewards cards you may be familiar with may also have higher interest rates. Here are some favorites, and the interest rates they carry. Remember that credit card companies can change interest rates and only people with the best credit ratings will qualify for the lowest interest rates.

Travel Credit Card Interest Rates

Travel rewards credit cards can have higher interest rates than the typical card because they offer valuable rewards if used correctly. These credit cards are good options for anyone who wants to earn benefits such as miles for booking award flights, but doesn’t plan to keep a balance on their card.

Interest rates for cashback cards

Cash-back cards offer the most flexible reward of all: cash. Typically, these cards earn a percentage of total purchases, up to around 2%. The money can then be applied to your balance, or even cashed out and assigned to other purposes.

Cash back credit card interest rates tend to be a bit lower than rewards credit cards. Here are the interest rates on some of the best cash back credit cards on the market today.

Student credit card interest rates

Created specifically for students, these cards are ideal for young adults who haven’t built up a lot of credit yet and can be secured with an up-front cash deposit.

Slightly more forgiving, these student credit cards can be a great way to build up credit while you study, but they can have high interest rates. While some borrowers with the best credit ratings will see rates around 18%, interest rates could reach 29%.

Interest rates for introductory APR cards

The best balance transfer credit cards allow you to consolidate your credit card debt onto one card while paying 0% APR for a promotional period, sometimes for over a year. These offers can save you a lot of money on interest, but weigh the pros and cons to be sure a balance transfer is worth it for you.

Cards with a 0% introductory APR can also be used to fund large purchases for a short period of time. Some cards offer an introductory APR of 0% on balance transfers and purchases.

But these cards won’t be interest-free forever: rates go up after the introductory period ends. During the introductory period, no interest will accrue on your balance. If you pay off your card in full by the time the offer is in place, this can be a good alternative to a personal loan. Once this introductory period is over, you will pay a fairly typical interest rate.

Here are some examples of how it works with some popular cards that offer 0% introductory rate.

Remember: interest rates only apply to outstanding balances

If you pay off your credit card in full each month, credit cards can be invaluable tools for earning airline miles or hotel points, earning cash back, and building your credit history, interest-free.

If you don’t pay your credit card bill in full each month, the interest rate will apply and be added to the total amount you owe. It can quickly spiral out of control, and your card’s accumulated debt cancels out any rewards you might be earning.

Paying your credit card in full means you never have to worry about paying more than you need to for your purchases and can also help you earn rewards to enjoy. Although credit card interest rates may seem high, they are non-existent if you pay your account in full each month and use your card responsibly.

How to reduce credit card interest

Getting a lower interest rate on your credit card can, in many cases, be as simple as calling the issuer and asking for a discount. Credit card interest rates are negotiable. Chances are you can get a lower rate just by asking if you’ve always made payments on time and have a good credit rating.

If you can’t get your rate reduced, there are always ways to reduce the amount of interest you pay. Paying off your entire balance each month is the safest way, if you can afford it.

Making multiple payments each month is another strategy for reducing interest charges. If you plan to pay off a certain amount of your credit card debt at the end of the month, but won’t be able to repay all of it, splitting that amount into multiple payments throughout the month reduces your average daily balance. and the amount of interest charged to you.

You can also consider a balance transfer, which is moving debt from a high-interest account to a lower-rate account. Some balance transfer credit cards are even interest-free for the first 12 to 21 months, which means that all your payments will go towards reducing the principal.


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