Credit cards can be a useful tool in your personal finance arsenal. These cards can help you build creditcover costs in an emergency situation, or just earn you points toward travel and cash back.
While credit cards can be important to build your credit history, it’s essential that you charge any purchases mindfully. Because if you don’t pay off your credit statement at the end of each month, your balance will accrue interest. And unless you have a 0% intro APR or other special-rate card, these fees can add up fast: The average credit card interest rate was 16.27% in August 2022, the most recent figure provided, according to the US Federal Reserve.
Whether you’re in the market for your first credit card or are pursuing the latest rewards credit cards, here’s an overview of what the current landscape looks like.
What Is the Average Interest Rate for a Credit Card?
The average interest rate on a credit card is typically somewhere between 10% and 30%. Depending on the category of the card and your creditworthiness, you’ll traditionally pay more or less interest.
Credit card interest rates can fluctuate, and rates are currently on the rise: The average credit card interest rate has increased over a six-month period in 2022, from 16.17% to 16.65%, according to CNN. Credit card balances — and debt loads — have also grown.
The Consumer Financial Protection Bureau (CFPB) reviews the consumer credit card market — practices of credit card issuers, consumer debt levels, etc. — every two years. In the 2021 Consumer Credit Card Market Reportauthors reported on credit scores and the average interest rates and reported the following.
Credit Scores and Interest Rates
|Credit Score||Approximate Average Interest Rate|
|Superprime (720 and higher)||17%|
|Prime (660-719)||twenty one%|
|Near-prime (620-659)||twenty three%|
Going deeper, here’s information on…