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What is the Average Credit Card Interest Rate in 2023

Triston Martin

Feb 26, 2024

The world of credit cards is complicated. It may take some time to assimilate the fundamental terms or the influence of Federal Reserve rates on your account. It's not always obvious how to handle credit cards and interest rates when attempting to get out of debt or improve your financial situation.

The annual percentage rate (APR) is one of the most crucial terms you'll come across. You will be charged the yearly percentage rate for borrowing money. It could be greater or lower depending on the quality of the applicant's credit score and credit history.

APRs vary depending on whether you're making a purchase, taking out a cash advance, transferring funds, or receiving a penalty. Interest rates below 17% are considered excellent, between 19% and 24% are typical, and anything beyond 24% is considered poor. It would help to familiarize yourself with credit card APR and interest rates better to handle your debt, money, and credit rating.

Average Credit Card Interest Rate

The interest rates charged on credit cards, like those charged on other types of loans, are reported as an annual percentage rate, or APR. Because the APR of a loan considers fees and other financial costs in addition to the interest rate, the APR of an installment loan, such as a personal loan or a mortgage, can be significantly greater than the interest rate.

However, the interest and annual percentage rates (APR) are the same regarding credit cards. It is also essential to remember that most credit cards come with variable interest rates.

It implies that when you create an account, your annual percentage rate (APR) is subject to change based on the current market benchmark interest rate. There are just a few credit cards that provide fixed rates, and if you have one of these cards, your rate will remain the same for as long as your account is active.

Types of Interest Rates

Credit card annual percentage rates (APRs) come in various forms. The interest rate you'll pay on purchases isn't the same as that on cash withdrawals or late payments over 60 days overdue.

The average annual percentage rate for a cash advance is roughly 25%, and the average APR for a penalty is around 29.99%, much higher than your purchase APR. Variable annual percentage rates (APRs) are applied to all credit cards and move in tandem with the prime rate set by the Federal Reserve.

Other loans, like certain mortgages, have an APR that remains constant. When you receive a credit card with a 0% interest rate for a limited period (often 12 or 18 months), this is called a promotional annual percentage rate (APR). Each category's variable annual percentage rates (APRs) should be easily accessible before card application.

You may also check your credit card statement or contact your credit card provider to inquire about the various APR rates if you already have a credit card. However, you should know all the details of a card's terms and conditions before applying.

What Effect Does Your Credit Score Have On The Interest Rate?

It serves as an indicator of credit risk, and credit card issuers place significant weight on your credit score when calculating the interest rate that will be applied to your account. According to the statistics, your likelihood of missing payments decreases directly to the strength of your credit score.

Due to this, the company that issued your credit card will normally provide you with a cheaper interest rate. However, if your credit score is barely above the minimum required to qualify for the card, you may be offered a higher rate than the other available alternatives.

Credit scores are just one element that card issuers look at, so don't focus too much on them. When determining your annual percentage rate (APR), they will also look at your income, the amount of other debt you have, the amount of accessible credit on other cards, and maybe other considerations.

Credit Card Interest Rates During The Introductory Period

The finest balance transfer credit cards allow you to consolidate your current credit card debt into a single card with a 0% APR promotion that often lasts for a year or more. You may save much money on interest by taking advantage of these offers, but you should weigh the pros and downs before making a balance transfer.

Large purchases can also be financed for a limited period using a credit card that offers a 0% intro APR. Initially, some credit cards provide 0% APR on debt transfers and purchases. However, the 0% APR promotion on these cards won't last forever: After the first discount period ends, the rates will increase.

There will be no interest charged to your account throughout the promotional period. In place of a personal loan, a credit card might work well if paid in full before the promotional period ends. After the introductory period ends, you will be subject to a standard interest rate.

How to Reduce Credit Card Interest Rates?

In many circumstances, all it takes to have your credit card interest rate lowered is to phone the card's issuer and ask for it. You may haggle for a lower interest rate on your credit card. If you have a solid payment history and credit score, you probably will be able to negotiate a lower interest rate.

Even if your rate isn't eligible for a decrease, you may still be able to pay less interest overall. The safest method is paying off your amount in full every month if you can. One more way to save money on interest is to pay more than the minimum every month.

If you can't pay off your credit card balance in full, but you know you can pay off a certain amount this month, spreading that payment out for the month might reduce your average daily balance and, in turn, your interest costs.


If you work to increase your credit score, you may be more eligible for cards with low-interest rates. If you need to improve your credit score before accessing the greatest bargains, don't let that deter you. If you use your credit card responsibly and pay off your debt in full every month, you may avoid paying interest on your balance and yet get the benefits of using a credit card.

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