Average Credit Card Interest Rate

The median credit card interest rate for all credit cards in the Investopedia database rose to 21.62% in October 2022 from 21.37% in September, based on average advertised rates across several hundred of the most popular card offers in the market. Investopedia’s average rate data differs markedly from the overall credit card rate average tracked by the Federal Reserve (the Fed), which was most recently quoted to be 16.27% for August 2022, due to the fact that the Fed samples a relatively limited number of banks and only considers the low end of the interest rate range advertised by card issuers. Given that the average FICO credit score in the U.S. was 716 as of April 2022, up 5 points from its level in 2020, according to Experian, Investopedia believes it is more accurate to track the median midpoint value of advertised credit card interest rate ranges rather than the low end as a 716 credit score would not qualify for the best rates available as implied by Fed average rates.

Credit card interest rates are expected to continue to adjust upward in response to Fed rate increases in 2022, as most card issuers employ variable interest rates that are indexed to the Federal Reserve’s Prime Rate. However, the lower and upper ends of available card rates can change from month to month depending on competitive pressures and individual banks’ risk policies. After having cut rates twice in 2019 for general economic reasons and then again in March of 2020 in an attempt utilize monetary policy to jump-start economic activity amid the initial COVID-19 crisis, the Federal Reserve has pivoted to an aggressive policy of rate increases to its benchmark federal funds interest rate. Specifically, due to dramatic increases in the consumer price index in Q4 of 2021, Q1, Q2 and Q3 2022 the Fed has indicated that interest rate hikes will continue to occur in 2022 following the first increase of 0.25% in April, a second of 0.50% in May, a third of .75% in July and a fourth of .75% in September in order to tamp down economic expansion and combat rising levels of inflation not seen in over 40 years. A wide variety of consumer loans, including credit cards, are tied to movements of the Fed funds rate which is the mechanism the Fed employs to stimulate or slow the magnitude of lending depending on economic conditions.

Several factors influence how individual credit card rates are set, the most important of which is credit quality, with those with excellent credit receiving the lowest rates and those with no credit or bad credit receiving the highest rates. Other factors include the type of credit card and the risk-based pricing policies of the specific credit card issuer. 

Investopedia tracks average advertised rates for new applicants, which are typically quoted as a range for each card product, across more than 300 card offers, which are shown below broken out by credit quality, card type, and card issuer.

Interest Rates by Credit Quality Types

Different ranges of credit quality can vary depending on the type of score used but the most popular credit score used by credit card lenders is the FICO score.

Different ranges of credit quality can vary depending on the type of score used but the most popular credit score used by credit card lenders is the FICO score. Credit quality is defined according to the FICO score ranges for each credit quality level: