What is the average APR on a credit card?

Group of people talking about the average APR, or annual percentage rate, on a credit card. Group of people talking about the average APR, or annual percentage rate, on a credit card. Image:

In a Nutshell

APR (annual percentage rate) is one of the key factors you should consider when shopping for a credit card. Here's what the average APR is and why it should matter to you.

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At a glance: Cards with a low variable APR for purchases*

Card Variable APR
Barclaycard Ring® Mastercard® 14.24%
The Amex EveryDay® Credit Card from American Express 14.74% - 25.74%

*All figures in the above chart reference the regular variable APR for purchases. Introductory or promotional APRs may differ. Your regular variable APR will be determined based on your creditworthiness.

According to the Federal Reserve’s first quarter data for 2017, the APR averaged across all credit card accounts at all reported banks was 12.54 percent. However, this isn’t necessarily reflective of the APR you’ll receive on a credit card you’re approved for.

If you carry a balance from month to month, a high annual percentage rate (APR) can essentially wipe all those rewards away, leaving you with a nice-looking card but none of the benefits to show for it.

When looking at new credit card offers, knowing the average APR can help you compare how expensive borrowing money will be.

To help you find the right credit card for you, let’s dig into what APR means in practical terms. We’ll then look into the average APR on a credit card and highlight some ways to find the lowest APR credit card available to you.

5 tips to improve your credit health

First things first: What does APR even mean?

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

Although APR is expressed as an annual rate, your credit card company uses it to calculate the interest charged during your monthly statement period.

Generally, credit card companies offer a grace period for new purchases. This period is the gap 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.

Heads up, though: If you pay less than the total balance, you’ll pay interest on your outstanding balance.

To calculate how much 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 on your account by 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 an APR of 15 percent. Your daily rate would be 0.041 percent (15 percent divided by 365). If the balance on your card today is $200, today’s daily interest charge would be $0.08 ($200 multiplied by 0.041 percent).

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

OK, but what is the average APR on a credit card?

Each week, CreditCards.com releases the national average APR, which is comprised of 100 of the most popular credit cards in the country. According to their June 21, 2017, release, the national average credit card rate across all types of cards was 15.96 percent.

But that statistic doesn’t tell the whole story. The average credit card APR varies depending on the kind of card you’re looking at. Travel rewards and cash back cards generally come with higher APRs to make up for the additional benefits these cards provide.

Another general rule of thumb? The lower your credit, the higher your APR. Cards aimed at people who need to work on their credit can come with some pretty hefty APRs.

Capital One® Secured Mastercard®, for example, has a variable APR of 26.99% for purchases and transfers, while Indigo® Platinum Mastercard® features a slightly better (but still not great) APR of 23.90% for purchases.

From our partner

Capital One® Secured Mastercard®

From cardholders in the last year

See Details, Rates & Fees

For example, Indigo® Platinum Mastercard®, a card that’s targeted toward people with less-than-perfect credit scores, has an APR of 23.90% for purchases.

Note that this isn’t always the case and individual cards may sway pretty far from the average. Still, it’s good to know what to look for depending on the type of card you have in mind.

From our partner

Indigo® Platinum Mastercard®

From cardholders in the last year

See Details, Rates & Fees

How much does a credit card’s APR actually matter to you?

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

But if you carry a balance from month to month or plan on financing a large purchase with plastic, choosing a low-interest credit card could save you a significant amount on interest and help you pay off the balance faster.

Finding the lowest rate available to you means comparing offers and card terms carefully. Here’s what you should look for:

  • Introductory/promotional APR. Many cards offer an introductory APR, usually 0 percent on balance transfers or purchases for anywhere from a few months to a year. This can be super helpful, but make sure you read the terms and conditions and pay off your balance before the APR jumps up to its regular rate.
  • Regular APR. After the introductory period, most cards offer a range of variable APRs depending on your creditworthiness. 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 higher 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 applying may give you a better idea of what to expect.
  • Cash advance APR. Banks and issuers typically charge a higher rate for cash advances, and interest accrues the moment 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 raise your rate in addition to charging you a late fee. Talk about adding insult to injury.

Bottom line

Ultimately, the best way to use a credit card is to pay your balance in full each month, so you never pay interest but get to enjoy all the perks the card can offer. If you do carry a balance, though, a low-interest card can be a great tool to help you pay off debt or finance a large purchase.

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