Average Credit Card Interest Rates and APR 2021

ElitePersonalFinance
Last Update: September 1, 2021 Credit Cards Loans Studies
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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 Average Credit Card Interest Rates in the U.S.

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%

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 do banks make money to pay our deposits?

From the interest that we pay to them on our loans and credit cards.

In cases, the 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 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 each company’s latest annual report and analyzed their current loan portfolios to find the figures.

Our analysis shows:

Institution: Outstanding Credit Card Loans:
Citigroup Inc. $169,188B
JP Morgan Chase & Co. $156,632B
Capital One Financial Corp. $116,361B
Bank of America Corp. $98,338B
Synchrony Financial $89,994B
American Express Company $81,854B
Discover Financial Services $72,876B
Wells Fargo & Co. $39,025B
U.S. Bancorp $23,363B

9 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 are JP Morgan and Capital One.

With over $156 billion and $116 billion in credit card loans combined, the three major players control over 52% of the American credit card market.

Average Credit Card APR by Institution and Type

Continuing with our theme, 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. APR acts as a proxy for the cost of late payments. We’ll explain in greater detail later.

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 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 Wells Fargo and U.S. Bancorp only trailing 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 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 18 14
JP Morgan Chase & Co. 15 15 12
Capital One Financial Corp. 12 15 9 12
Bank of America Corp. 12 12 8.33
Synchrony Financial
American Express Company 13.80 14 10 13.80
Discover Financial Services 14 14 12 14
Wells Fargo & Co. 14.40 12 9 13.50
U.S. Bancorp 12.75 12 12 18

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 offering an average introductory APR period of 12 months, they present the best options for business owners.

Our last category is low-interest because none of our study institutions offer introductory APR periods for secured cards. 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 Institution and Type

Applied to accounts where balance payments are 60 or more days late, Penalty APRs 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%

The highest penalty APR falls within Capital One’s business segment across all institutions and categories, with noticeable consolidation among the numbers. Late payments are subject to 31.65% interest – 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%, 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. After 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, 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 calculating credit card bills 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

Citigroup Inc. Annual Report

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

U.S. Bancorp 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

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ElitePersonalFinance

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