Average credit card interest rates: Week of August 9, 2023

Average card APR hits new high as more lenders hike rates


It’s hardly been two weeks since the U.S. prime rate climbed to its highest level in decades and, already, most big lenders have pushed up APRs on brand-new cards by the same amount. As a result, a growing number of credit card applicants are now being offered APRs that, until last year, were all-but-unheard-of on a general market credit card.

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The average credit card interest rate is 20.97 percent.

Credit card APRs are continuing to go up on brand-new offers, according to CreditCards.com’s latest Weekly Rate Report.

Less than two weeks after the Federal Reserve pushed the central bank’s key rate to its highest level in decades, Citi became the latest major card issuer to match the Fed’s rate hike and selectively increase the APRs it advertises online.

Following in the footsteps of Bank of America, Discover, American Express, U.S. Bank, Barclaycard and Wells Fargo (all of which hiked new card APRs last week), Citi increased most new card APRs by a quarter of a percentage point.

As a result, the average APR for brand-new cards raced to its highest point ever on Wednesday, landing just three basis points shy of 21 percent for the first time on record.

For context, the highest weekly APR average CreditCards.com had ever recorded until last year was 17.8 percent.

However, not every Citi card received an equivalent rate hike. As other lenders have done in recent weeks, Citi applied this week’s rate changes unevenly, capping APRs for many cards at a maximum of 29.99 percent.

As card APRs climb, more lenders hit a ceiling for how much more they’ll charge

CreditCards.com only considers a card’s lowest possible interest rate when calculating the national average. However, most credit card offers advertise a wide range of potential APRs — particularly on general market cards that appeal to a broad audience.

For example, ever since the Fed began pushing up benchmark rates to curb inflation, a historic number of card offers have not only pushed starting APRs well above 20 percent, many now advertise maximum APRs as high as 28 percent or more.

As a result, the average maximum card APR is currently at an all-time high of 28.43 percent and is all-but-certain to climb further still as more lenders match the Fed’s latest rate increase.

Right now, three-quarters of all cards tracked by CreditCards.com cap APRs at 28 percent or higher, while 50 percent cap APRs at 29 percent or more.

That’s a historic change from previous years when such high rates were all-but-unheard of on a general market credit card. Until last year, in fact, only subprime and gas credit cards charged APRs that high.

But after 11 rate hikes from the Fed in the span of 14 months, a growing number of lenders appear to be hitting their limit for just how much more they’ll charge on a general market rewards card. So cardholders may not see maximum APRs on general market cards climb much further going forward.

This week, for example, Citi increased the minimum APR on the American Airlines Aadvantage MileUp MasterCard up by a quarter of a percentage point to 21.24 percent, but left the card’s maximum APR unchanged at 29.99 percent.

Other lenders made similar moves last week, including American Express, U.S. Bank, Barclaycard and Wells Fargo.

However, Citi hasn’t capped rates below 30 percent on every Citi card. For example, the Shell Fuel Rewards Mastercard from Citi now advertises a 31.74 percent APR.

So far, only a minority of lenders have opted to push APRs on certain cards past the 30 percent threshold. As a result, more than a third of cards included in CreditCards.com’s Weekly Rate Report now cap APRs at 29.99 percent or more, but only 14 out of 100 cards cap APRs above 30 percent.

Most cards that do charge APRs over 30 percent are subprime or retail credit cards.

Along with higher card APRs, credit card balances are also increasing

Credit card APRs are pricier than ever, but that has yet to deter a substantial number of credit card holders from taking on more debt.

On the contrary, Americans’ collective credit card balances hit another all-time high this summer, climbing above the $1 trillion mark for the first time ever, according to new research from the Federal Reserve Bank of New York.

Despite this year’s higher borrowing costs, consumers charged more overall, opened more card accounts and took advantage of higher credit limits, the New York Fed found.

But as credit card APRs continue to rise, additional research suggests that cardholders are also having a harder time shaking off their new card balances.

According to research released this week by Bankrate, the share of cardholders paying interest on a credit card has jumped significantly in recent months.

In 2021, only 39 percent of cardholders surveyed by Bankrate carried a balance from month to month. But today, 47 percent of cardholders surveyed by Bankrate admit to revolving a credit card balance — often for months at a time.

In fact, among cardholders with lingering debt, 60 percent say their balances have hung around for at least a year or more, up from 50 percent in 2021.

Why interest rates are climbing

Most U.S. credit cards are tied to the prime rate, and when the federal funds rate changes, the prime rate typically changes by the same amount.

Lenders are free to set APRs on new cards as they wish and technically aren’t required to change the APRs when a card’s base rate changes. (On the other hand, lenders are required to match changes to the prime rate on open credit card accounts that are contractually tied to it.) Historically, most issuers do revise the APRs they advertise when the card’s base rate changes.

That’s what happened in the spring of 2020. After the Fed slashed rates by a point and a half in March 2020 in response to economic softening from the pandemic, nearly all of the issuers tracked weekly by CreditCards.com — with the notable exception of Capital One — lowered new card APRs as well.

Since then, most new cards included in this rate report continued to advertise the same APRs throughout the pandemic. As a result, the national average card APR hardly budged for nearly two years, remaining within a rounding distance of 16.00 percent for nearly 24 months.

But now that the prime rate is climbing, credit card offers are following suit. Current credit card holders will also see their rates climb, causing their debt to become much more costly to carry.

CreditCards.com’s Weekly Rate Report

RateAvg. APRLast week6 months ago
National average20.97%20.93%20.28%
Low interest18.10%18.07%17.35%
Cash back20.21%20.18%19.94%
Balance transfer19.20%19.17%18.41%
Instant approval25.23%25.18%24.53%
Bad credit29.68%29.65%29.09%

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.)

Source: CreditCards.com

Updated: August 9, 2023

Historic interest rates by card type

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 secure 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 percent 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. Contact your credit card issuer and try to negotiate a lower APR.
  • Monitor your credit reportCheck your credit reports regularly to be 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. The three credit bureaus are also providing free weekly credit reports through 2023 due to the pandemic.

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The editorial content on this page is based solely on the objective assessment of our writers and is not driven by advertising dollars. It has not been provided or commissioned by the credit card issuers. However, we may receive compensation when you click on links to products from our partners.

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