Average credit card interest rates: Week of March 22, 2023

The average APR for brand-new cards held steady for a second week as lenders braced for Fed's next rate decision


The average APR for brand-new credit cards didn’t budge this week, according to CreditCards.com’s latest Weekly Rate Report. Most lenders left credit card terms alone while waiting for news from the Fed.

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The average credit card interest rate is 20.35 percent.

With all eyes on the Federal Reserve this week, most lenders left the APRs they advertise online unchanged. As a result, the national average APR for brand-new cards stayed put Wednesday, according to CreditCards.com’s Weekly Rate Report, remaining just shy of an all-time high.

But now that the Fed has announced yet another rate hike (its ninth since March of last year), lenders could start revising new card offers as soon as next week.

That, in turn, could help push the national average card APR well past its previous peak of 20.37 percent. In fact, if most lenders follow historical precedent and swiftly match the Fed’s latest quarter-point rate hike, the average minimum card APR could soon land within a rounding distance of 21 percent for the first time on record.

The average maximum card APR is also poised to break more records this spring. CreditCards.com only considers a card’s lowest possible APR when calculating the national average, but most card offers advertise a wide range of interest rates — particularly on general market cards that appeal to a wide audience. Currently, the average maximum card APR is 27.74 percent, CreditCards.com data shows, but it could come within a striking distance of 28 percent for the first time ever if enough lenders decide to raise rates on brand-new offers.

Similarly, the average median card APR — which is closer to what many cardholders are assigned — currently sits at 24.05 percent, but could quickly climb closer to 24.30 percent if most lenders hike rates.

It’s too soon to tell, though, just how much appetite lenders will have in the coming weeks for increasing the APRs they advertise online — particularly since most lenders have already hiked rates on both new and existing card accounts by a record four-and-a-half percentage points since last year. Although it’s likely that the average APR for brand-new cards will increase at least somewhat this spring, it’s also possible that average APRs could trend up more slowly this time around, decline somewhat or hardly move at all.

With at least one big lender sticking to lower APRs for now, other lenders could follow

Already, at least one major credit card lender, Bank of America, has walked back some earlier rate hikes, recently slashing APRs on many of the bank’s most popular cards by three quarters of a percentage point.

It’s not yet clear how Bank of America and other credit card lenders will respond to the Fed’s latest rate increase, particularly since the economic environment that lenders are operating in is also shifting quickly. But so far, at least, Bank of America has stuck to its latest rate cuts, helping bring those cards’ APRs closer in line with historical averages.

In addition, recent bank turmoil has roiled financial markets in recent weeks, putting an uncomfortable spotlight on banks’ practices. Meanwhile, lenders are facing multiple signs of increased financial strain amongst their current card customers. For example, data from both the Federal Reserve Bank of New York and the credit bureau TransUnion recently showed that credit card balances are not only at an all-time high. Delinquencies — meaning late payments by 30 days or more — are also on the rise.

So it’s possible that at least some lenders will take a wait-and-see approach for now and not raise new card APRs — or they may follow Bank of America’s earlier lead and cut APRs on select offers, giving at least some new cardholders a break on rising rates.

Borrowers could have a tough time, though, securing a card’s lowest rate. A recent survey of senior loan officers released earlier this year by the Federal Reserve already shows that banks have begun tightening lending standards for new cards. Now, with the economy cooling more visibly, lenders are likely to tighten up their lending even further, making new cards with competitive APRs harder to secure.

Despite recent financial turmoil, Feds signal that at least one more rate hike is ahead

Recent bank turmoil has also prompted some analysts to call for a temporary freeze on the Federal Reserve’s key interest rate, the federal funds rate. But so far, Fed officials have made clear that they still aren’t ready yet to give up their campaign to beat inflation with higher rates.

As little as a few weeks ago, Fed officials had even begun signaling an increasingly hawkish stance toward monetary policy, causing some observers to predict that federal rates could climb by as much as half of a percentage point this month. Fed chairman Jerome Powell helped fuel that speculation earlier this month when he told Congress that Fed policymakers could decide to raise rates by more than anticipated in order to beat a surprisingly sticky inflation rate that is still several points above the Fed’s target goal of 2 percent.

But such talk of higher rates was quickly upended last week when multiple banks cracked unexpectedly, prompting regulators to step in and rescue depositors’ funds. As a result, Fed officials adopted a much softer tone this week after announcing their latest rate decision.

In a statement announcing their latest rate increase, Fed officials acknowledged that deeper-than-expected cracks were beginning to show in the U.S. economy and that further financial turmoil could force policymakers to change course sooner than planned.

But policymakers still voted to increase the Fed’s benchmark interest rate, the federal funds rate, by another quarter of a percentage point in spite of the past week’s financial turmoil. “The U.S. banking system is sound and resilient,” officials noted.

In addition, Fed officials forecast that they would likely raise rates at least one more time this year in order to put a bigger dent in the inflation rate.

Although controversial, the Fed’s policy of raising target interest rates in response to widespread price increases has long been seen by Federal Reserve policymakers as a key tool for combating inflation.

Fed chairman Jerome Powell later said in a press conference that policymakers did consider pausing rate hikes because of the financial turmoil, but decided that the economy was still strong enough to withstand higher rates.

“If we need to raise rates higher, we will,” he later added. In addition, Powell noted during the press conference: “It will be a real cost to bring [the inflation rate] down to 2 percent. But the cost of failing is even higher.”

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 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 average20.35%20.35%18.16%
Low interest17.37%17.37%15.25%
Cash back19.98%19.97%17.95%
Balance transfer18.48%18.47%16.25%
Instant approval24.68%24.68%21.37%
Bad credit29.02%29.02%26.99%

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: March 22, 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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