Average credit card interest rates: Week of May 5, 2021

The average credit card interest rate is 16.15%.

Interest rates on brand-new credit cards remained unchanged again this week, according to the CreditCards.com Weekly Credit Card Rate Report. For the fifth straight week, the national average credit card APR remained fixed at a one-year high of 16.15%.

Every week, CreditCards.com checks the online APR offers of a representative sample of 100 U.S. credit cards.

Average rates still low compared to pre-pandemic APRs

Interest rates on new credit card offers are currently at their highest point since March 2020. But that doesn’t mean the average credit card APR presented to new customers is all that high by historical standards – especially compared to the years right before the pandemic.

In fact, today’s credit card shopper is likely to see much lower rates across a variety of issuers than they saw just over a year ago.

That’s because most big lenders chose to revise APRs on brand-new offers (as well as on open credit card accounts) last year when benchmark interest rates fell dramatically amid financial turmoil from the pandemic.

Last March, shortly after the coronavirus forced businesses across the country to shut their doors, the Federal Reserve announced two emergency rate cuts totaling a full percentage point and a half. That, in turn, caused the U.S. prime rate (which influences most American credit cards) to also tumble by the same amount, settling at 3.25% for the first time since 2015.

Lenders aren’t required to revise new card offers when a credit card’s benchmark interest rate changes. (They do have to revise APRs on open credit cards.) But most lenders increase or decrease new card APRs when federal interest rates change, CreditCards.com has observed.

As a result, the national average card APR fell rapidly last spring as lenders scrambled to adjust to lower federal interest rates.

In the span of just six weeks, for example, the national average card APR dropped from 17.35% on March 1 to 16.14% by April. The average card APR would have fallen even more sharply. But some lenders tracked by CreditCards.com chose not to revise new card APRs last spring, despite a lower prime rate.

For example, Capital One is still advertising the same APRs on most of its consumer credit cards that it advertised in early 2020.

As a result, the national average APR for brand-new cards fell by just under 1.25 percentage points between March and April, even though federal interest rates fell by a point and a half during the same period.

Since then, the average card APR has hardly budged – largely because the majority of lenders tracked by CreditCards.com have refrained from making any further rate changes.

See related: How credit card interest works

Some issuers have hiked their rates

A few lenders have increased APRs on select consumer cards, reversing some of the rate cuts they enacted last spring. In addition, some issuers have significantly increased rates on co-branded cards, making it more expensive to carry a balance on a store or specialty card.

For example, some of the cards that advertise higher rates now include the L.L. Bean Visa credit card, the Texaco Techron Advantage Visa, the Nordstrom Visa credit card and the Carnival World Mastercard.

One bank card issuer – U.S. Bank –has also been unusually active in recent months, increasing rates on multiple cards by at least one percentage point or more.

But overall, rate changes on brand-new credit cards have been rare this year, with most lenders leaving APRs on most consumer cards unchanged since 2020.

As a result, the national average card APR has hardly budged for more than 12 consecutive months, stubbornly remaining within a rounding distance of 16% all year.

That’s a big change from pre-pandemic times when borrowers typically encountered much higher rates.

The average new card APR awarded to the best applicants in 2019, for example, was 17.57%, according to CreditCards.com data. In 2018, it was 16.8%.

Until last year, in fact, the average credit card interest rate hadn’t come this close to 16% since 2017.

CreditCards.com’s Weekly Rate Report

	Avg. APR	Last week	6 months ago
National average	16.15%	16.15%	15.97%
Low interest	12.91%	12.91%	12.77%
Cash back	16.03%	16.03%	15.85%
Balance transfer	14.03%	14.03%	13.85%
Business	14.22%	14.22%	13.91%
Student	15.98%	15.98%	16.12%
Airline	15.51%	15.51%	15.50%
Rewards	15.85%	15.85%	15.75%
Instant approval	18.47%	18.47%	18.38%
Bad credit	25.30%	25.30%	24.43%
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.)
Source: CreditCards.com
Updated: May 5, 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.

Source: creditcards.com