The average median interest rate for credit cards in July 2024 is 24.72%. Investopedia tracks interest rates on over 300 credit cards each month. July rates increased 10 basis points compared to June's 24.62%.
The credit card interest rates tracked by Investopedia are based on the average advertised rates of hundreds of the most popular card offers. Investopedia's average interest rate is different from the interest rate tracked by the Federal Reserve, which tracks the average listed interest rate for all accounts at each reporting bank, and recently projected that interest rates for the first quarter of 2024 will be 21.59%.
Key Takeaways
The average median credit card interest rate in July 2024 is 24.72%. Credit card interest rates are determined primarily by your credit score and credit history. If you have a good credit score, you may be able to get a lower credit card interest rate. The best credit cards on the market come with rewards, balance transfer offers, and more, and the right card for you will depend on your situation.
How are credit card interest rates determined?
Credit card interest rates have remained unchanged since the start of 2024. Various consumer loans, including credit cards, are tied to fluctuations in the federal funds rate, a mechanism employed by the Federal Reserve to stimulate or slow the volume of lending depending on economic conditions. The Fed has kept the federal funds rate unchanged after raising interest rates in 2022 and 2023 to combat record-high inflation that began in 2021. As inflation began to decline, the Fed kept interest rates unchanged for the last five months of 2023, a trend that continued into the first two months of 2024.
The Fed said it will keep interest rates on hold at its next meeting on June 12, 2024, leaving open the possibility of keeping rates on hold or even lowering them at its next meeting in March and future meetings this year depending on economic conditions. Currently, 92% of interest rate traders expect the Fed to keep rates on hold at its next meeting on July 31.
Federal interest rate policy has a direct impact on card interest rates, as most credit card issuers have floating interest rates that are tied to the Federal Reserve Bank's prime rate. However, the minimum and maximum available card interest rates can change from month to month depending on competitive pressures and each bank's risk policy.
There are several factors that determine the interest rate for an individual credit card, the most important of which is credit quality. People with good credit get the lowest interest rates and people with no or poor credit get the highest interest rates. Other factors include the type of credit card and the risk-based pricing policies of a particular credit card issuer.
Investopedia tracks the average advertised interest rates for new applicants for over 300 different cards. Rates are typically presented as a range for each card product. These rates are broken down by credit score, card type, and card issuer, as follows:
Credit card interest rates and personal loan interest rates
Credit card interest rates tend to hover in roughly the same range as personal loan interest rates. While credit cards are a type of revolving credit with variable interest rates, personal loan interest rates are usually fixed for a specific amount and repayment period. Many consumers take advantage of balance transfer credit card offers to consolidate high-interest credit card debt. Additionally, the best personal loans can also be used for debt consolidation, including credit card debt and other types of consumer debt.
According to a September 2023 survey by Investopedia, the most common reason for taking out a personal loan was debt consolidation.
Interest rates by credit type
The credit quality range varies depending on the type of score used, but the most common 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.
FICO Credit Score Ranges Very Good to Excellent 740–850 Good 670–739 Average 580–669 Poor or No Credit 350–579
Tip
For anyone who needs to build or rebuild credit, it's important to use credit responsibly and aggressively. That means always paying your bills on time and keeping your credit utilization below 30% of your credit limit. If you don't already have credit to your name, a secured credit card is a good place to start. It will take time, but using credit responsibly can show positive results after just six months and will build up over time.
Interest rates by credit card type
Balance transfer: A credit card that offers a promotional rate (often 0%) for a year or more.Business: A credit card designed for small business owners, offering rewards and discounts on business expenses, working capital segregation, and often business-related purchase categories.Low cost: A credit card for those with poor credit or no credit history, often with no annual fee but a higher interest rate to offset the higher credit risk.Rewards: A credit card that offers points, miles, or cash back on purchases.
Secured: A credit card that requires a security deposit to serve as an initial credit limit. Student: A credit card for people with limited credit history or credit education, often college students.
Interest rates by issuer
Credit card issuers have different risk-based pricing policies that affect the range of interest rates they advertise, which are ultimately assigned to customers based on the credit score of approved applicants.
Prime Rate Trends
Credit card interest rates are primarily tied to the prime rate, with a margin varying depending on the card product level and the creditworthiness of the individual account holder. The prime rate was 8.50% as of May 2024, increasing 525 basis points since the beginning of 2022 following several rate hikes by the Federal Reserve, ending with a 0.25% increase in July 2023. However, at each subsequent Federal Open Market Committee (FOMC) meeting, interest rates have remained unchanged. The next Federal Reserve rate setting meeting is due to conclude on June 12, 2024, and with inflation remaining stubbornly persistent, if weakening, the federal funds rate is likely to remain on hold again.
Delinquency Rate Trends
Credit card delinquency rates (defined as accounts that are 90 days or more past due) have remained below 3% in recent years. However, during the pandemic, delinquency rates fell to as low as 1.48%, bottoming out in April 2021. Since then, the increase in revolving debt incurred by consumers over the past two years has caused delinquency rates to more than double, reaching 3.16% as of the first quarter of 2024, the highest level since early 2012.
Credit Card Debt Trends
Total consumer revolving credit card debt surpassed the $1 trillion mark just before the pandemic, then plummeted to a low of $970 billion in January 2021. Revolving debt has since risen back above pre-pandemic levels, reaching more than $1.34 trillion in March 2024, the most recent month for which the Federal Reserve has reported.
How to find the average interest rate on credit cards
Investopedia tracks individual credit card interest rates for more than 300 network-branded cards offered to the public by 43 of the nation's largest banks and issuers. Most credit card interest rates are advertised in a range from low to high, depending on the applicant's credit score. In determining the average interest rate by credit score, card type, or card issuer, Investopedia calculates the average midpoint of the advertised interest rate range and also calculates the average of the low and high rates within the range.