Average Credit Card APR Is Below Pre-Pandemic Levels

Person with glasses looking at credit card bill while holding a card.


The pandemic has lowered the cost of credit card debt, according to a new report from The Balance.

The average credit card interest rate is now 20.20%—one of the lowest monthly averages recorded since The Balance began tracking APR data in October 2019. At the start of 2020, by comparison, it was 21.22%, 1.02 percentage points higher.

Even credit cards that typically charge higher APRs, such as secured and retail cards, now have lower rates, on average, than a year ago, based on card data tracked by The Balance. For example, the average secured card APR is now 19.87%, down 1.35 percentage points from last year.

Like many recent changes in the financial markets, these interest rate decreases are tied to the coronavirus pandemic. Since most credit card APRs are based on the prime rate, which is tied to the Federal Reserve’s benchmark rate, card APRs quickly fell (by more than a  percentage point, on average, across card types) following two emergency federal funds rate cuts in March 2020.

Since then, credit card purchase APR changes have been few and far between. In fact, the average interest rate of all 300+ cards in The Balance’s database has hovered near the current level for about nine months. 

Issuers Dial Back Balance Transfer Deals 

Balance transfer APR deals aren’t as generous (or common) as they were this time last year. Just over a quarter (about 26%) of all cards in our database are advertising promotional balance transfer rate offers for new cardholders right now compared to 29% at this time last year. 

Long 0% balance transfer APR deals are more uncommon now, too. Only five cards in our database currently advertise balance transfer APR deals that are longer than 15 months, including the U.S. Bank Visa Platinum Card, which boasts the best 0% deal right now: 0% for 20 months. There used to be more cards offering such lengthy balance transfer deals, but those deals were dialed back last spring when issuers tightened lending standards to avoid taking on extra financial risk during the pandemic. 

Some of the more noteworthy former offers, such as the 21-month offers once advertised by the Citi Simplicity and Citi Diamond Preferred cards until June 2020, have yet to return, indicating card issuers are lending with caution as the new year begins.  

Highest Penalty APR Is Now Below 30%

Not all cards charge penalty rates, but among those that do (about one-third of all cards tracked by The Balance), the average cost has also inched down in the last year. 

Before the pandemic, the highest penalty (default) rate was more than 31%. Today, after some offer changes in the second half of 2020, the highest credit card penalty APR is 29.99%, based on data tracked by The Balance. The average penalty rate (28.58%) is still well above the average purchase APR (20.20%), but the current average default rate did fall 0.52 percentage points from this time last year. 

Because credit card penalty rates aren’t based on the prime rate like variable purchase APRs, these lower rates aren’t directly tied to Fed rate changes. Instead, issuers such as Capital One and Commerce Bank adjusted their penalty rates due to other business factors.


To learn more about the current credit card APR environment, check out the latest rate report from The Balance.

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  1. Board of Governors of the Federal Reserve System. "Open Market Operations."

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