Credit card issuers are continuing to lie low this summer with national average rates currently at their lowest point since March.
The average credit card interest rate is 16.13%.
Unusually low rates on brand-new credit cards are still holding steady this summer, according to the CreditCards.com Weekly Rate Report, as most big lenders continue to leave new card APRs unchanged.
For the 14th month in a row, the average minimum credit card APR began the month near 16%, which is well below the average card APR that lenders advertised before the Federal Reserve dramatically cut benchmark interest rates in March 2020.
Before the pandemic, for example, the average new card APR typically started somewhere between 17% and 18%. Meanwhile, most cards also advertised maximum interest rates as high as 24% to 25% or more, on average.
But after the pandemic reached U.S. shores, dramatically reshaping American life, along with consumer lending, most lenders tracked by CreditCards.com followed the Federal Reserve’s lead and cut both minimum and maximum APRs on all or most of their consumer credit cards by a full point and a half. That, in turn, caused the average minimum card APR – which is what CreditCards.com reports each week – to tumble to its lowest point since 2017.
Card APRs have barely moved since 2020This week, none of the cards tracked weekly by CreditCards.com advertised new interest rates. As a result, the national average card APR stayed put at 16.13% for the third consecutive week.
Overall, average card APRs have hardly budged in more than a year.
In June 2020, for example, the average credit card interest rate was 16%. In the fall of 2020, it briefly dipped to a more-than-three-year-low of 15.97% before climbing again this winter to 16.05%. Since February, the average minimum card rate has stubbornly remained between 16.12% and 16.15% and is unlikely to change significantly anytime soon.
That’s because most lenders tracked weekly by CreditCards.com have appeared reluctant to advertise new card APRs through most of the pandemic. Since 2020, for example, only a handful of cards included in the weekly rate report have had their pricing significantly revised.
Changes to minimum card APRs – particularly on cards designed for borrowers with good to excellent credit – have been especially rare. As a result, many borrowers shopping for new cards have enjoyed uncommonly low rates throughout the past year.
Not all borrowers are enjoying such low rates, though. According to CreditCards.com data, most of this year’s rate savings are only going to borrowers with the very best scores.
See related: How to lower your credit card interest rate
Lower-score applicants missing out on pandemic-era savings
CreditCards.com only considers a card’s lowest possible interest rate when calculating the national average. However, most lenders advertise a wide range of possible APRs, including maximum rates that are often 6 to 10 points higher than a card’s minimum rate.
Among popular rewards cards, for example, it’s not unusual for a card to advertise rates as low as 12% to 15%, but only assign those comparatively low rates to applicants with the best scores. Other applicants, by contrast, are often awarded rates that are several points higher.
Generally, the minimum APR advertised on a new credit card is reserved for borrowers with the best credit, while APRs in the middle of an APR range or at the top end are assigned to everyone else. In fact, many credit card lenders only assign three possible APRs to new applicants: the lowest APR a credit card advertises, the highest APR or an APR directly in the middle.
Maximum APRs show minimal decreases
Like minimum credit card APRs, the average maximum credit card APR has fallen significantly this year, compared to 2019 and early 2020, giving many card applicants a chance to secure much lower rates than they might have gotten before the pandemic.
But according to CreditCards.com data, maximum rates on new credit card offers haven’t declined by nearly as much this year as minimum interest rates – in part because a number of lenders tracked by CreditCards.com have chosen a different pricing strategy for their cards’ highest APRs.
For example, some lenders have opted to increase the maximum APRs on select cards, but they didn’t increase the cards’ minimum APRs. Other lenders even widened the range of possible APRs on certain cards by trimming the cards’ minimum rates while simultaneously increasing the cards’ maximums.
For example, Bank of America recently cut the minimum APR on two of its no-annual-fee travel rewards credit cards by 1 percentage point and increased the cards’ maximum APRs by the same amount. As a result, the difference between the lowest available rate on the Bank of America Travel Rewards credit card and the highest rate is now 10 points. Previously, it was eight points.
The average median card APR – which is the APR that’s closest to what many applicants with good to excellent credit are likely getting – is also down this year. But like the average maximum card APR, it also hasn’t fallen quite as much as the average minimum card APR has. For example, the average median card APR is currently 19.88%, down by just over 1 percentage point from an average median APR of 20.95% in February 2020.
The average minimum credit card APR, by contrast, has fallen at a significantly higher rate of 1.22 percentage points over the same period. Although the difference is small, that suggests that applicants with the highest credit scores are enjoying significantly more savings, on average, than applicants with lower scores.
Meanwhile, APRs on many subprime and store credit cards (which are often easier for borrowers with lower scores to get) have actually increased since the beginning of the pandemic, rather than decreased. As a result, the average APR on cards for borrowers with bad credit is now just slightly below what it was in February 2020.
CreditCards.com’s Weekly Rate Report
|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: June 9, 2021|
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.