What Is The Average APR For A Credit Card?

Based on data from the Federal Reserve for the first quarter of 2020, the average APR on all credit card accounts was 15.09%.

However, the average credit card APR does not necessarily reflect the APR you will receive on a credit card for which you are approved. The national average APR for all credit cards on which interest was assessed is even higher, at 16.61%.

And these statistics don’t tell the whole story. The average APR can also vary based on the type of card you’re looking at. For example, secured credit cards often have higher APRs than unsecured credit cards.

Why is it important to know the average APR?

When shopping for new credit card offers, knowing the average APR can help you compare interest rates to get an idea of ​​the best rates available.

Let’s dive into what APR means in practical terms, and then highlight a few ways you can shop around for a credit card with a competitive APR.

What does APR mean?

What is APR? Simply put, a credit card’s interest rate is the price you’ll pay to borrow money. For credit cards, interest is typically expressed as an annual rate known as the annual percentage rate.

Although the APR is expressed as an annual rate, it is used by your credit card company to calculate the interest charged throughout your monthly statement.

Credit card companies generally offer a grace period for new purchases. This period is the interval between the end of your card’s billing cycle and the date your payment is due. With most credit cards, if you pay off your balance in full and have no outstanding cash advances, you won’t be charged interest on new purchases during the grace period.

Keep in mind, though: If you pay less than your full balance, you’ll pay interest on your outstanding balance.

To calculate the amount of interest you’ll pay each day you carry a balance, you can convert your annual percentage rate to a daily percentage rate by dividing it by 365. At the end of each day, the credit card company multiplies the current balance by your account for the daily rate. That daily interest charge is added to your balance the next day.

For example, let’s say you have a credit card with a 15% APR. Your daily rate would be 0.041% (15% divided by 365). If your card balance today is $200, today’s daily interest charge would be $0.08 ($200 multiplied by 0.041%).

The 8 cents of interest will be added to your balance tomorrow, for a new balance of $200.08, and so on until you make payment.

Buy a competitive APR

If you pay off your balance in full each month and don’t miss any payments, the APR doesn’t have to be your main concern. You’re better off looking for a card that offers the best rewards, cashback, or benefits that fit your lifestyle and spending habits.

But if you carry a month-to-month balance or plan to finance a large purchase with plastic, choosing a lower-interest credit card could save you a significant amount in interest and help you pay off your balance faster.

Finding the lowest rate available to you means comparing card offers and terms carefully. This is what to look for.

  • Introductory/Promotional APR –  Many cards offer an introductory APR, typically 0% on balance transfers and/or purchases from a few months to a year. This can be very helpful, but be sure to read the terms and conditions and pay off your balance before the APR goes up to its normal rate.
  • Regular APR –  After the introductory period, most cards offer a range of variable APRs based on your credit status. Generally speaking, the lower end of the APR range is reserved for consumers with good to excellent credit. On the other side of the token, the highest APRs are for consumers at the lower end of eligible credit scores. Your actual rate will be determined by the issuer when you apply, but looking at your credit scores before you apply can give you a better idea of ​​what to expect.
  • Cash Advance APR:  Banks and issuers generally charge a higher rate for cash advances, and interest accrues at the time you take the advance; sorry, no grace period here. For this reason, we recommend avoiding credit card cash advances whenever possible.
  • Penalty APR:  If you miss a payment, the credit card company may increase your rate in addition to charging you a late fee. Talk about adding insult to injury.


Ultimately, the best way to use a credit card is to pay off your balance in full each month, so you never pay interest, but instead, enjoy all the benefits the card has to offer. However, if you carry a balance, a low-interest card can be a great tool to help you pay down debt or finance a large purchase.

Whichever card you choose, remember that a low APR credit card is an opportunity to pay down your debt quickly by putting more of your monthly payment toward principal (the amount of money you originally borrowed before adding the interests). Take advantage of that introductory period and low rates to make financial progress on terms that work best for you.

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