The average credit card APR stayed the same this week as card issuers left their rates alone, according to the CreditCards.com Weekly Credit Card Rate Report.
The average minimum credit card APR held firm Wednesday after lenders declined to revise rates on new offers for another week. As a result, borrowers in the market for a new card continued to enjoy starting APRs that are more than a full point lower on average than they were a year ago.
Cardholders with excellent credit are enjoying some of the sharpest rate savings this year. For example, lenders have clipped APRs on some of the most popular rewards cards by at least a point and a half in the past year. For example, the Discover it® Cash Back card currently starts APRs at 11.99%, which is well below the minimum APR most low rates advertise. A year ago, by contrast, it advertised a minimum APR of 13.49%.
Some of the most striking rate decreases have occurred on travel cards, which had surged to record high rates in 2019. For example:
- In January 2020, the Chase Sapphire Reserve charged an 18.49% minimum APR. Today, it starts APRs at 16.99%.
- Similarly, APRs on the Citi Premier® Card currently start at 15.99%. A year ago, the lowest APR cardholders could get was 17.49%.
- The lowest rate Hilton enthusiasts could get on the Hilton Honors American Express Card last winter was 17.24%. Today, the card’s APR starts at 15.74%
As a result, the average rewards card APR has tumbled from 17.11% in the second week of 2020 to 15.76% today, while the average airline card APR has fallen from 16.9% to 15.53%.
As the end to the coronavirus pandemic edges closer, lower rate travel cards could become more attractive to cardholders who are dreaming of a post-pandemic vacation.
Even low interest and balance transfer cards are much less expensive nowadays, giving cardholders who need to carry a balance a temporary reprieve.
Last January, for example, the U.S. Bank Visa Platinum Card and Citi Simplicity® Card both charged a 15.49% APR. Now, borrowers could secure an APR as low as 13.99% on the U.S. Bank Visa Platinum and as low as 14.74% on the City Simplicity. Meanwhile, Bank of America has reintroduced the BankAmericard® credit card after a temporary pause with a minimum APR of 12.99%. A year ago, the best APR cardholders could get was 14.49%.
Most cards received their biggest rate cuts in March and April when the Federal Reserve cut its benchmark interest rate, the federal funds rate, by 1.25 percentage points. When federal interest rates change, most lenders also match the changes on new card offers that are tied to the U.S. Prime Rate.
However, a few lenders have cut rates on select cards by an even larger amount. For example, Wells Fargo cut the APR on the Wells Fargo Rewards® card by five and a half percentage points last year, making it one of the lowest rate cards Wells Fargo offers. Cardholders who qualify could get a rewards card APR as low as 12.49%.
Today’s lower rates won’t last forever, though, since most are due to federal interest rate changes, rather than independent rate strategies.
As soon as the Federal Reserve begins increasing rates, the APRs on all variable rate cards tied to the prime rate will also go up.
It will be a long time, though, before cardholders in good standing will have to worry about higher rates on cards they’ve already opened. The Fed has said it is unlikely to hike rates for at least another year.
See related: How do credit card APRs work?
All information about the U.S. Bank Visa Platinum Card and Citi Simplicity Card has been collected independently by CreditCards.com and has not been reviewed by the issuer. These cards are no longer available through CreditCards.com.
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: January 13, 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.