The average APR on new credit card offers tumbled again this week, dropping to its lowest point since December 2017. APRs on brand-new credit cards are now more than one and a half points lower, on average, than they were this time last year.
The average APR on new credit card offers tumbled again this week, dropping to its lowest point since December 2017.
APRs on brand-new credit cards are now more than one and a half points lower, on average, than they were this time last year.
Compared to last summer, when average rates peaked at 17.8%, the difference is even more pronounced – especially for cardholders with less-than-perfect scores.
When CreditCards.com calculates the national average interest rate, it only considers a card’s lowest possible rate. However, most general market credit cards advertise a wide range of potential interest rates, including maximum rates that are typically well above 20%.
In July 2019, the average maximum card APR stood at 25.16%. At the time, many rewards cards for consumers with good to excellent credit advertised APRs as high as 27% or more. Now, the average maximum card APR is down by more than two percentage points. It currently stands at 23.15%.
Meanwhile, the average median card APR, which is closer to what many new cardholders are charged, has fallen by 1.64 percentage points. It currently stands at 19.84%.
Cards from major banks are more affordable than they’ve been in years
This year’s dramatic drop in new card APRs has made it easier for consumers to find a card with an affordable APR.
Consumers shopping for a new personal credit card, for example, are seeing minimum APRs on some bank-issued cards as low as 11.99%. That’s a big shift from previous years when cards with minimum APRs below 15% were becoming increasingly hard to find.
Meanwhile, the number of cards with maximum rates above 26% has also fallen sharply. Among the 100 cards included in the weekly rate report, just 12 charge maximum APRs above 26%. All 12 of the cards left standing with maximum APRs above 26% are either retail credit cards or are designed for cardholders with bad or average credit.
Chase cuts rates by one percentage point
Every week, CreditCards.com evaluates the APRs, annual fees and promotional terms of 100 U.S. credit cards.
Chase cut rates on its line of cards by a full percentage point this week after trimming them by half a percentage point the week before. The combined one and a half-point cut on Chase-issued cards now fully reflects the Fed’s two emergency rate cuts from March.
The Federal Reserve cut rates by 1.5 percentage points last month in response to the COVID-19 pandemic, which has forced businesses across the country to close. When the Fed revises its benchmark interest rate, the federal funds rate, most lenders eventually revise new card APRs as well – at least temporarily. However, some issuers are slower than others to revise new offers.
See related: How to lower your credit card interest rate
Some card issuers hiked APRs this week
So far, most major lenders have now cut rates by one and a half percentage points in the last month. However, not all lenders are currently trimming rates.
Capital One, for example, has yet to match the Federal Reserve’s March rate cuts.
Instead, Capital One widened the range of APRs on several of its business cards this week. For example, it lowered the minimum APRs on the Capital One Spark Miles Select for Business card and the Capital One Spark Cash Select for Business card by half a percentage point and increased the cards’ maximum APRs by one and a half percentage points. Small business owners with excellent credit are now offered an APR range starting at 13.99% and maxing out at 23.99%.
Capital One also hiked the APR on the Capital One Spark Classic for Business card by 2.5 percentage points. Small business owners with average credit can now expect a 26.99% APR.
Pentagon Federal Credit Union also hiked rates this week. It increased the minimum APR on the PenFed Power Cash Rewards Visa Signature card by 3.25 percentage points. In addition, it hiked the minimum APR on the PenFed Promise Visa card by half a percentage point.
*All information about the Capital One Spark Miles Select for Business, the Capital One Spark Cash Select for Business and the Capital One Spark Classic for Business has been collected independently by CreditCards.com and has not been reviewed by the issuer. These cards are no longer available through CreditCards.com.
Average credit card interest rates this week
|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: April 8, 2020|
Historic interest rates by card type
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.
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 length of time you’ve been handling credit.
However, even if you’re new to credit or are rebuilding your score, there are steps you can take to ensure 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. Lenders also want to see that you are responsible with your credit and don’t overcharge. As a result, credit scores take into account 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% of your total credit limit.
- Build a lengthy and diverse credit history. Lenders also like to see that you’ve been successfully using 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 lender doesn’t close it.
- Call your lender. If you’ve successfully owned a credit card for a long time, you may be able to convince your lender to lower your interest rate – especially if you have excellent credit. Reach out to your lender and ask if they’d be willing to negotiate a lower APR.
- Monitor your credit report. Check your credit reports regularly to make sure you’re being 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.