Average Credit Card Interest Rates and APR 2021
Contents
- 1 Average Credit Card Interest Rates and APR 2021: Statistics and Key Findings
- 2 Average Credit Card Interest Rates and APR 2021: Charts, Graph, Analysis
- 3 Historical US Average Credit Card Interest Rates
- 4 Historical US Average Credit Card Interest Rates
- 5 The Largest American Credit Card Issuing Institutions
- 6 9 Largest American Credit Card Issuing Institutions
- 7 Average Credit Card APR by US Institution and Type
- 8 Average Introductory APR Period (Months) by US Institution and Type
- 9 Average Penalty APR by US Institution and Type
- 10 How to Calculate Your Credit Card Bill
- 11 How to Lower Your Credit Card APR
- 12 How We Conducted The Study
- 13 Conclusion
How much is the average credit card interest rate in 2021? If you want the right answer, read on.
ElitePersonalFinance analyzed the Fed and all big banks in the US.
Average Credit Card Interest Rates and APR 2021: Statistics and Key Findings
The average credit card interest rate across all accounts is 14.65%. In 2019 it was 15.05%. This makes a total decrease of 0.4% or a relative decrease of 2.66%.
The accounts assessed interest is 16.28%. In 2019 it was 16.98%. This means a total decrease of 0.7% or a relative decrease of 4.12%.
Till 2019, we had a continuous rise in “All Accounts” and “Accounts Assessed Interest.” The only small exception from that, with only a 0.10%, we see in 2015 in Accounts Assessed Interest.
In 2020, there was a decrease in all average credit card interest rates.
Average Credit Card Interest Rates and APR 2021: Charts, Graph, Analysis
Historical US Average Credit Card Interest Rates
| Year: | All Accounts: | Accounts Assessed Interest: |
| 2015 | 12.09% | 13.66% |
| 2016 | 12.35% | 13.56% |
| 2017 | 12.89% | 14.44% |
| 2018 | 14.22% | 16.04% |
| 2019 | 15.05% | 16.98% |
| 2020 | 14.65% | 16.28% |
Historical US Average Credit Card Interest Rates
ElitePersonalFinance analysis of Federal Reserve Data
Till 2019, we had a continuous rise in “All Accounts” and “Accounts Assessed Interest.” The only small exception from that, with only 0.10%, we had in 2015 in “Accounts Assessed Interest.”
The number of new credit card accounts in 2020 was 12 million, which decreased by 9 million compared to the 21 new opened credit card accounts in 2019.
The average credit card interest rate across all accounts is 14.65%. In 2019 it was 15.05%. This makes a total decrease of 0.4% or a relative decrease of 2.66%.
The accounts assessed interest is 16.28%. In 2019 it was 16.98%. This means a total decrease of 0.7% or a relative decrease of 4.12%.
COVID has significantly decreased all bank interest rates, some up to 3 times.
How banks make money to pay our deposits?
From the interest that we pay to them on our loans and credit cards.
In cases, we have seen such a significant decrease in bank interest rates, we should see a significant decrease in credit card rates? However, this didn’t happen.
The Largest American Credit Card Issuing Institutions
To really understand how average credit card APRs behave across the United States, we analyzed the nine largest credit card lenders’ balance sheets in America. We combed through each company’s latest annual report and analyzed their current loan portfolios to find the figures.
Our analysis shows:
| Institution: | Outstanding Credit Card Loans (Billions): |
| Citigroup Inc. | $169.188 |
| JP Morgan Chase & Co. | $156.632 |
| Capital One Financial Corp. | $116.361 |
| Bank of America Corp. | $98.338 |
| Synchrony Financial | $89.994 |
| American Express Company | $81.854 |
| Discover Financial Services | $72.876 |
| Wells Fargo & Co. | $39.025 |
| U.S. Bancorp | $23.363 |
9 Largest American Credit Card Issuing Institutions
Largest American Credit Card Issuing Institutions
Citigroup has over $169 billion outstanding credit card loans on its balance sheet as the largest credit card lender in America.
Not far behind is JP Morgan and Capital One.
With over $156 billion and $116 billion in credit card loans, respectively – combined – the three major players control over 52% of the American credit card market.
Average Credit Card APR by US Institution and Type
Continuing with our theme, next, we analyzed the official websites of the nine major lending institutions to assess how average credit card APRs compare across both institutions and types.
But before we get into the details, let’s define APR.
As an abbreviated term for Annual Percentage Rate (APR), APR is your borrowing cost for credit card purchases. All institutions lower the percentage to generate a daily periodic rate. We’ll explain in greater detail later. APR acts as a proxy for the cost of late payments.
Now, what about the percent ranges below?
Well, like any other lending product, institutions determine your credit card APR by analyzing your creditworthiness. Borrowers with the highest credit scores receive the lowest APR, while those with the lowest credit scores receive the highest APR.
The ranges you see represent the high and low for each category.
| Institution: | Rewards: | Cash Back: | Business: | Low-Interest: | Secured: |
| Citigroup Inc. | 17.38% – 25.99% | 15.74% – 25.74% | 17.99% – 25.99% | 15.74% – 25.74% | 24.74% |
| JP Morgan Chase & Co. | 18.11% – 25.33% | 17.37% – 25.43% | 17.14% – 23.34% | 16.49% – 24.49% | – |
| Capital One Financial Corp. | 16.29% – 25.54% | 16.41% – 26.07% | 15.24% – 25.24% | 14.24% – 24.24% | 24.99% |
| Bank of America Corp. | 17.07% – 25.52% | 16.57% – 26.07% | 13.93% – 23.68% | 15.24% – 25.24% | 24.99% |
| Synchrony Financial | 20.10% – 27.69% | 22.24% – 28.24% | 17.15% – 25.15% | 16.49% – 24.49% | – |
| American Express Company | 16.84% – 26.68% | 15.24% – 26.24% | 16.85% – 24.91% | 15.24% – 26.24% | – |
| Discover Financial Services | 14.24% – 25.24% | 14.24% – 25.24% | 15.24% – 23.24% | 14.24% – 25.24% | 25.24% |
| Wells Fargo & Co. | 16.44% – 27.64% | 16.24% – 28.24% | Prime + 5.99% – Prime + 17.99% | 14.74% – 27.24% | 21.24% |
| U.S. Bancorp | 16.05% – 25.93% | 16.24% – 25.74% | 13.74% – 23.99% | 14.74% – 25.74% | 21.24% |
When breaking down the data from the all-rewards category, including all credit cards offering points or cash rewards, we found that Discover offers the lowest average APR. At a low-end range of 14.24%, its APR is 1.81% less than its next closest competitor – U.S. Bancorp.
The cashback category presents a similar story. With an average APR that’s 1.5% and 1% below Citigroup and American Express – both laggards have work to do to catch up to Discover.
When it comes to the business segment, U.S. Bancorp and Bank of America lead the way. With low-end average APRs of 13.74% and 13.93%, both credit card solutions are more than 1.31% less than the next closest competitor.
Discover, and Capital One has the best options with low-end average APRs of 14.24% in the low-interest category. However, the rate gap is much smaller, with both Wells Fargo and U.S. Bancorp only trailing by 50 basis points (0.50%).
Last is the secured category.
While not all lenders in our study offer secured cards, those with average APRs range from 21.24% to 25.24%. With Wells Fargo and U.S. Bancorp offering the lowest rates, they’re your best options for obtaining a secured credit card.
Average Introductory APR Period (Months) by US Institution and Type
Just as our nine US institutions engage in APR competition, they compete with their introductory APR periods.
But first, what is an introductory APR period?
Introductory APR Periods are a designated number of months with 0% interest to define the term. They represent how long you can carry-forward credit card balances without any interest charges. Used to attract new clients, introductory APR periods can offer a great way to get your finances in order.
However, like all good things, they don’t last forever.
Check out the statistics below:
| Institution: | Rewards: | Cash Back: | Business: | Low-Interest: | Secured: |
| Citigroup Inc. | 15.00 | 18.00 | – | 14.00 | – |
| JP Morgan Chase & Co. | 15.00 | 15.00 | 12.00 | – | – |
| Capital One Financial Corp. | 12.00 | 15.00 | 9.00 | 12.00 | – |
| Bank of America Corp. | 12.00 | 12.00 | 8.33 | – | – |
| Synchrony Financial | – | – | – | – | – |
| American Express Company | 13.80 | 14.00 | 10.00 | 13.80 | – |
| Discover Financial Services | 14.00 | 14.00 | 12.00 | 14.00 | – |
| Wells Fargo & Co. | 14.40 | 12.00 | 9.00 | 13.50 | – |
| U.S. Bancorp | 12.75 | 12.00 | 12.00 | 18.00 | – |
Credit Cards without introductory APR periods are excluded from calculated averages.
While we see much less variance here than with our average APR numbers above – in the all-rewards category – Citigroup and JP Morgan offer the longest average introductory APR period of 15 months.
In the cashback category – with an average of 18 months – Citigroup stands on its own.
It’s interesting that while its average APRs are at the high-end in many categories above, its introductory APR periods are most attractive. Again, considering it’s the largest US credit card lender – with over 169 billion in outstanding loans – it seems to have found a reliable way to attract and retain customers.
For the business segment, grace periods are noticeably less than their consumer counterparts across all lenders. With JP Morgan, Discover, and U.S. Bancorp each offering an average introductory APR period of 12 months, they present the best business owners’ options.
Considering none of our study institutions offer introductory APR periods for secured cards, our last category is low-interest. At 18-months, U.S. Bancorp offers the longest average grace period, with its next closest competitor nearly four months behind.
Average Penalty APR by US Institution and Type
Applied to accounts where balance payments are 60 or more days late, Penalty APRs are used to compensate lenders for unpredictable borrowers. Simultaneously, not all institutions in our study implement penalty APRs, which apply interest rates substantially above their average ranges.
| Institution: | Rewards: | Cash Back: | Business: | Low-Interest: | Secured: |
| Citigroup Inc. | 29.99% | 29.99% | 29.99% | 29.99% | 29.99% |
| JP Morgan Chase & Co. | – | – | 29.99% | – | – |
| Capital One Financial Corp. | – | – | 31.65% | – | – |
| Bank of America Corp. | 29.99% | 29.99% | – | – | – |
| Synchrony Financial | – | – | – | – | – |
| American Express Company | Prime + 25.99% | Prime + 25.99% | Prime + 25.99% | Prime + 25.99% | – |
| Discover Financial Services | – | – | – | – | – |
| Wells Fargo & Co. | – | – | – | – | – |
| U.S. Bancorp | – | – | 29.99% | – | – |
With noticeable consolidation among the numbers, the highest penalty APR – across all institutions and categories – falls within Capital One’s business segment. Late payments are subject to 31.65% interest – which is 16.41% above the low-end of its average business APR range and 6.40% above the high-end of its average business APR range.
As you can see, late payments can be quite costly.
How to Calculate Your Credit Card Bill
Credit card issuers use clever math to extract the highest possible amount with profitability in mind.
This is how it works:
- Calculate your daily periodic APR
The first step in calculating your credit card bill is to convert your annual APR to a daily APR. You simply divide the annual rate by 365. Using the current US average interest rate of 16.97% – for accounts assessed interest – we come up with 0.046% (0.1697 / 365).
- Calculate your average daily balance
Next, you need to figure out your average daily balance. While this gets a little tricky when many purchases are involved, the simplest approach is to sum all of your debit entries and divide the total by the number of days in your billing cycle.
- Multiply your daily periodic APR by your average daily balance
Assuming an average daily balance of $1,000, we can calculate our daily balance owed by multiplying the daily periodic APR by the average daily balance. Using the APR we calculated above, we found out $0.46 (0.00046 * 1000).
- Multiply your daily balance owed by the number of days in your billing cycle
The last step is to calculate the total amount owed. If we assume a 30-day billing cycle, our total interest payment works out to $13.86 (0.46 * 30).
Here is a great payoff calculator.
https://www.debt.com/tools-tips/calculators/credit-card-payoff-calculator/
How to Lower Your Credit Card APR
While credit card companies determine your APR by assessing your overall creditworthiness, we have a few tips to get you on the fast track to a lower interest rate.
- Build a reliable credit history
While somewhat obvious, building a reliable credit history can make you more attractive in the eyes of lenders. The first step is to raise your FICO score to at least 670. When using existing cards, try and keep monthly purchases to less than 30% of your balance limit.
- Shop around for the best offers
With so much competition in the lending space, institutions often make interest rate concessions to attract new clients. While some lenders may reject your application, others often go out of their way to provide unique offers to secure your business.
- Just ask
Often overlooked as a way to lower your credit card APR, simply asking politely can often move the needle. If you have an existing relationship with an institution and are known as a long-term and loyal customer, they’ll often work with you to avoid losing your business. When calling, simply explain your circumstances and ask what they can do. Moreover, if you have readily available offers from other institutions, they’re more likely to accommodate your request.
How We Conducted The Study
With accuracy in mind, we went directly to the source. Analyzing the latest SEC filings from the largest credit card issuing institutions within the United States, we first presented how each is positioned on its balance sheet. Next – using data from each institution’s official website – we broke down average credit card statistics by the institution, type, introductory APR, and penalty APR. Last, we provided a template for how credit card bills are calculated and tips for lowering your credit card APR.
Conclusion
Moving in lock-step with the Federal Reserve’s benchmark interest rate, average credit card APRs have continued to rise over the last four years. As large US institutions look to increase their credit card exposure, borrowers have been more than willing to play the counterparty.
Reaching an all-time high of 830 billion in 2019, total American credit card debt has surpassed levels only seen leading up to the 2008 financial crisis. And as total debt continues to rise, average credit card APRs are rising along with it.
When trying to extrapolate future trends, the Federal Reserve’s ‘wait-and-see’ approach to interest rate increases may allow current APR figures to hold up a while longer. However, if you want to get a sense of what’s moving the needle, pay attention to rhetoric from Federal Reserve officials and what traders are pricing within the Treasury bond market.
Sources
Federal Reserve Consumer Credit Report
The Largest American Credit Card Issuing Institutions
JP Morgan Chase & Co. Annual Report
Capital One Financial Corp. Annual Report
Bank of America Corp. Annual Report
Synchrony Financial Annual Report
American Express Company Annual Report
Discover Financial Services Annual Report
Wells Fargo & Co. Annual Report
Average Credit Card APR by US Institution, Type, Introductory APR Period, and Penalty APR
Citigroup Inc. Credit Card Interest Rates
JP Morgan Chase Chase Credit Card Interest Rates
Capital One Financial Corp. Credit Card Interest Rates
Bank of America Credit Card Interest Rates and Business Credit Card Interest Rates
American Express Company Credit Card Interest Rates and Business Credit Card Interest Rates
Discover Financial Services Credit Card Interest Rates
Wells Fargo & Co. Credit Card Interest Rates and Business Credit Card Interest Rates
US Bancorp Credit Card Interest Rates and Business Credit Card Interest Rates
