Average credit card interest rates remain fixed at 16.22% for the seventh consecutive week, according to CreditCards.com’s Weekly Credit Card Rate Report.
The average credit card interest rate is 16.22%.
Consumers shopping for a new credit card are continuing to enjoy unusually low rates on brand-new offers, according to CreditCards.com’s Weekly Credit Card Rate Report, which shows average credit card interest rates fixed in place again this week.
The average APR for brand-new credit cards registers at 16.22% for the seventh week in a row.Every week, CreditCards.com checks the average APRs of a representative sample of 100 U.S. credit cards and compares them to the minimum APRs that issuers previously offered.
This week, none of the 100 cards included in CreditCards.com weekly rate evaluation advertised new interest rates. But these days, that’s nothing new.
The coronavirus pandemic has reshaped broad swaths of American life, including U.S. lending. Credit card issuers appear to have become much more reluctant to independently revise new card APRs. After the Federal Reserve slashed rates to near-zero in the spring of 2020, for example, the majority of lenders cut rates on new credit cards by the same amount. But since then, the majority of issuers have opted to leave APRs unchanged.
As a result, average credit card interest rates have been relatively low over the past year and a half, even after upgrades to several credit cards’ rewards rates in 2021.
Multiple lenders, for example, have introduced brand-new rewards cards in recent months or upgraded the rewards programs on classic cards. But unlike in years past, issuers have largely declined to significantly hike rates in order to help them pay for the more generous rewards. Among the most recent examples:
- Chase recently introduced major point upgrades to two of its signature rewards cards, the Chase Sapphire Reserve and the Chase Sapphire Preferred Card. But it didn’t hike the cards’ APRs or annual fees.
- Wells Fargo swapped out its 1.5% cash back card for a 2% cash back card this summer. But it left the new Wells Fargo Active Cash℠ Card’s APR relatively low compared to what it used to charge cash back cardholders prior to the pandemic.
- Similarly, Citi and Bank of America also introduced new rewards credit cards this summer with notable perks. But both the Citi Custom Cash℠ Card and the Bank of America® Unlimited Cash Rewards card charge relatively low rates compared to what issuers typically charged before last year.
Average credit card interest rates remain stable
Despite rewards credit card upgrades, average credit card interest rates remain stable – and lower – compared to previous years.
In September 2019, for example, the average new card APR stood at 17.61%, while the average rewards card APR registered at 17.38%. Similarly, in 2018, the average APR for all new credit cards, as well as rewards cards, was 16.92%.
Over the past 18 months, by contrast, the average new card APR hasn’t once strayed above 16.22%. For most of the past year and a half, in fact, the average credit card interest rate has remained stubbornly fixed between 15.97% and 16.22%. Meanwhile, the average rewards card APR has been even stickier. It has consistently hovered between a low of 15.75% and a high of 15.97% during the same period.
That’s a big change from previous years when fluctuations in new card APRs, including rewards cards, were more prevalent.
In 2019, for example, the average new card APR swung between a low of 17.2% and a high of 17.8%. In 2018, average rates climbed from a low of 16.32% to a high of 17.21%.
The last time interest rates remained this steady for this long of a period was in 2016 when the average new card APR hovered between 15.18% and 15.29% all year. That was also the last time federal interest rates were at rock bottom for most of the year.
Based on CreditCards.com data, it appears that issuers are more willing to make independent APR changes during periods when there’s more interest rate activity from the Fed.
Between December 2008 and 2016, for example, the Federal Reserve left its benchmark interest rate, the federal funds rate, near zero in order to help stimulate the U.S. economy.
The Fed’s reasoning at the time was similar to the decision it made in March 2020 when it pushed rates to rock bottom in order to help stave off economic fallout from the coronavirus pandemic.
According to CreditCards.com data, issuers left minimum APRs on most new cards unchanged for the majority of that period, particularly after the Credit CARD Act of 2009 went into effect in 2010. Between 2010 and 2016, for example, the average new card APR remained within a rounding distance of 15% for six consecutive years.
It wasn’t until the Federal Reserve began gradually increasing rates at the end of 2016 and into 2017 that issuers began hiking rates more frequently – and not just when the Fed hiked rates. Between 2017 and early 2020, issuers often hiked rates after introducing new rewards programs or refreshing a card’s benefits.
If credit card issuers follow the same pattern they did the last time federal interest rates were this low, then it’s possible that lenders will start hiking rates more aggressively once the Fed begins hiking rates as well.
CreditCards.com’s Weekly Rate Report
|Avg. APR||Last week||6 months ago|
|Methodology: The national average credit card APR comprises 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: September 15, 2021|
Historic interest rates by card type
Some credit cards charge even higher average credit card interest rates. 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. Since 2007, CreditCards.com has calculated average rates for various credit card categories, including student cards, balance transfer cards, cash back cards and more.
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 age of your oldest credit accounts. 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. Creditors also want to see that you are responsible for your credit and don’t overcharge. As a result, credit scores consider 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 successfully used 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 issuer doesn’t close it.
- Call your issuers. If you’ve successfully owned a credit card for a long time, you may be able to convince your credit card issuers to lower your interest rate – especially if you have excellent credit. Reach out to your credit card issuer and ask if it’d be willing to negotiate a lower APR.
- Monitor your credit report. Check your credit reports regularly to make sure you’re 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.