Average Credit Card Interest Rate Is 22.70%

The average credit card interest rate for purchases is now 22.70%, according to December rates and offer data collected by The Balance, the highest average APR since we began recording them.

In December, The Balance recorded 157 pricing changes among the offers in its database, a significant bump from the 91 we recorded in November. Most of the interest-rate moves were hikes of 0.75 percentage points (89 price changes) or 0.50 percentage points (51 price changes). We also recorded a handful of 1.5 percentage point hikes (11) and one 3.0 percentage point increase.

Credit card interest rates are based on the prime rate, which closely follows the benchmark rate set by the Federal Reserve. In mid-December, the Fed boosted rates 0.50 percentage points, the seventh rate hike this year.

Add it all up and the rate moves moved the average 0.33 percentage points higher in December.

Average Credit Card Interest Rates (APRs) on Purchases by Card Category

Card type is just one factor that influences a credit card’s interest rate. To learn how The Balance categorizes card types, see the “Methodology” section at the bottom of this report. Other determining factors include your credit score and the type of transactions you charge to your card.

Cash Advance Rates

Most credit cards allow you to tap your available credit by using the physical card to withdraw cash at an ATM or via a convenience check. About 89% (316 cards) of the offers we track allow cash advances, but that convenient feature typically comes at a cost: an APR that’s higher than the average rate across all cards.

• Average cash-advance APR: 28.00%, up from last month’s 27.68%. In many cases, issuers juiced cash-advance rates alongside their purchase-rate hikes—0.75 or 0.50 percentage points.

Penalty Interest Rates

A credit card’s penalty rate is a higher interest rate some credit card issuers charge should you fail to meet the terms of the agreement. If you fall behind on your monthly credit card payments, exceed your credit limit, or your bank returns a monthly payment, your standard purchase APR may rise to the penalty interest rate (or “default rate”).

While not all credit cards charge penalty rates, many do, including 138 (about 39%) of the cards surveyed for this report.

• Average penalty APR: Based on The Balance’s card sample, the average penalty rate in December was 29.42%, up slightly from the previous month’s 29.37%. December’s penalty rate is 6.72 percentage points higher than the average purchase APR.
• Highest penalty APR: 33.74% is the highest penalty rate any of the cards in our database charge. The most popular penalty APR is 29.99%; 110 cards in our database charge it.

Average APR Based on Recommended Credit Score

Based on the card offer data collected by The Balance, credit cards marketed to consumers with bad and fair credit scores (below 670, according to FICO) have an average purchase APR of 25.31%. This is 3.16 percentage points higher than the 22.15% average APR of cards marketed to people with what FICO considers good or excellent credit.

A good credit score indicates to lenders that you can manage credit cards, loans, or debt repayment, and it often results in lower interest rates. Conversely, cards that accept applicants with lower credit scores charge higher interest rates to make up for the risk of default.

What Average Credit Card APRs Mean for You

If you’re in the process of paying off credit card debt, remember that credit card interest compounds, meaning previous interest charges are included in each monthly interest calculation.

As a result, card balances can grow quickly, and every APR percentage point matters. Even small changes to your card’s interest rate—similar to what we’ve seen happen to the average credit card APR over the past year—can add up to higher debt costs. So if you fall behind on your monthly payments, those costs can rise even more under a much higher penalty APR.

Methodology

This monthly report is based on credit card offer data collected and monitored on a rolling basis by The Balance for 356 U.S. credit cards. The most recent data was collected throughout December 2022. Our data pool includes offers from 45 issuers, including the largest national banks. We track average interest rates on both a weekly and monthly basis for each card category, plus the overall average rate for all cards.

How We Calculate APR Averages

The Balance gathers purchase and transaction APR information from current credit card terms and conditions. If a credit card APR is posted as a range, we first determine the average of that range, then use that figure in our overall average rate calculations. We do this so the statistics are true averages—not skewed toward the low or high end of a spectrum.

The overall average APR in this report is an average of the average APR in each category we track: travel, cash-back, secured, business, student, store cards, and “other” (which includes balance-transfer cards and low-cost, no-frills cards).

How We Calculate Average Rates vs. the Fed

We look at interest rates by card category and transaction type to give a clearer view of the interest rate you can expect to pay based on the kind of card you're using, or how you plan to use it. By comparison, the August data (the most recent available) from the Federal Reserve puts the average credit card APR at 19.07%. However, the Fed calculates its rate based on voluntary reporting from 50 credit-card-issuing banks, and it's unclear what goes into those averages or what types of cards make up those averages.

The Fed also reports an average rate on accounts that are charged interest (meaning those that carry balances month to month), although its calculation gives more weight to accounts with high balances. In August, the average interest rate on credit cards accruing finance charges was 20.40%, a new high. The previous record high in the series, which dates to 1994, was 17.14%, recorded in the second quarter of 2019.

How We Categorize Cards

We assign a category to each credit card in our database, and a card can go in only one category. Here’s how we define them:

• Business credit cards: Cards that small-business owners can apply for and use to make purchases for their companies
• Cash-back credit cards: Cards that offer cash back on most purchases you make with the card
• Travel rewards credit cards: Cards that allow you to earn extra points or miles on travel purchases, either with specific travel brands or on a variety of travel-related expenses; cards that offer high-value travel redemption options are also part of this group.
• Student credit cards: Cards for college or graduate students who are at least 18 years old
• Secured credit cards: Cards requiring a security deposit that’s usually the same amount as the credit limit; these cards are aimed to help people with poor or no credit build credit.
• Store credit cards: Cards you can use at particular retail stores and sometimes, other places; they often offer discounts or rewards for purchases made at the associated store (or chain of stores).
• Other: Cards that do not fit any of the following categories: business, cash-back, student, travel, secured, and store; this includes cards that offer very few—if any—features.