Understanding the Average Credit Card Interest Rate in May 2025: What Consumers Need to Know

An In-Depth Guide to Current Credit Card APRs, How They Vary, and Strategies to Secure Lower Rates

Introduction

When managing personal finances, understanding credit card interest rates is crucial.

As of the week of May 5, 2025, Forbes Advisor’s weekly report indicated that the average credit card interest rate in the United States is 28.72%.

This figure reflects a comprehensive aggregation of various credit card types across the country.

It is important to note that this national average serves as a benchmark but may not represent the exact APR offered to each individual.

Credit card rates fluctuate based on numerous factors such as creditworthiness, income, and card type.

Current National Averages and Federal Reserve Data

In addition to Forbes Advisor’s weekly report, the Federal Reserve also monitors average credit card interest rates across U.S. consumers.

As of February 2025, the Federal Reserve documented that the average interest rate on credit card accounts carrying balances subject to interest was 21.91%.

The discrepancy between the Federal Reserve’s figure and Forbes Advisor’s stems from differences in data collection methods, the types of cards included, and account activity.

Regardless, both numbers highlight that credit card APRs are notably higher than many other types of consumer debt.

How Average Credit Card Interest Rates Are Calculated

Methodology Overview

The average credit card interest rate is derived by analyzing a large dataset comprising over 250 credit cards available in the U.S. market.

For overall averages, cards such as business, student, secured, and corporate credit cards are excluded to focus on consumer credit cards.

Data is further segmented to calculate average APRs by card categories, including:

• Airline rewards cards
• Hotel rewards cards
• Flexible rewards cards
• Cash back cards
• Student cards
• Balance transfer cards
• 0% introductory APR cards
• Business credit cards

This comprehensive approach ensures that the average reflects a broad cross-section of card types while providing category-specific insights.

Average Credit Card Interest Rates by Card Type

This week, the overall average APR across all consumer credit cards tracked by Forbes Advisor stands at 28.72%.

Specific card categories display variations due to differences in benefits, risk profiles, and issuer strategies. Typically:

• Rewards cards tend to have higher APRs to compensate for benefits like points or cash back.
• Balance transfer and 0% APR cards offer lower initial rates but revert to standard rates after introductory periods.
• Student and secured cards usually have higher APRs due to the increased credit risk associated with applicants.

Influence of Credit Scores on Interest Rates

Credit card issuers use your FICO® score to estimate the risk involved in lending to you.

Generally, higher credit scores result in access to lower APRs, while lower scores may lead to higher rates or denial of credit.

Estimated APRs by Credit Score Tier

Credit Score TierFICO® Score RangeApproximate Average APR (2022)

Superprime 740 and Above 9%

Prime 670 – 739 18%

Subprime 580 – 669 22%

Deep Subprime 579 and Below 23%

Why Your Credit Card Interest Rate Matters

Although the difference between a 22% and 28% APR might appear modest, the cumulative interest over time can amount to thousands of dollars.

Impact on Debt Repayment: An Illustrative Comparison

Credit Card BalanceMonthly PaymentAPRMonths to Pay OffTotal Interest Paid

$7,500 $200 22% 63 $4,970

$7,500 $200 28% 86 $9,643

The example above demonstrates that a higher interest rate not only prolongs the time to repay debt but nearly doubles the total interest expense.

Best Practice: Pay Your Balance in Full

The most effective way to avoid paying interest is to pay your full credit card balance every month by the due date.

By doing so, the APR becomes irrelevant, as no interest charges will accrue.

How to Lower Your Credit Card Interest Rate

For those carrying balances, lowering the interest rate is an effective strategy to reduce debt faster.

Several methods can help reduce your credit card APR:

1. Balance Transfer Credit Cards

Opening a new credit card that offers a low or 0% introductory APR on balance transfers can allow you to shift existing high-interest debt and pay it down without interest for a promotional period, often ranging from 12 to 21 months.

• Benefits: Reduced interest cost during the introductory period.
• Considerations: Balance transfer fees may apply; eligibility often requires good to excellent credit.
• Tools: Forbes Advisor’s balance transfer calculator helps estimate potential savings.

2. Debt Consolidation Loans

A debt consolidation loan, often a personal loan, can be used to pay off multiple credit card balances, leaving you with one monthly payment at typically lower interest rates.

• Advantages: Simplifies repayment and can lower overall interest costs.
• Impact on Credit: May reduce credit utilization, potentially boosting your credit score.
• Eligibility: Depends on credit profile and debt-to-income ratio.

3. Negotiating a Rate Reduction

Cardholders with a history of timely payments and a strong credit score can request a lower APR from their card issuer, particularly if competing offers with better rates exist.

• Tips: Be prepared with data on alternative offers; a polite and informed conversation can yield results.
• Limitations: Not all issuers will reduce rates, but many are willing to consider requests.

Avoiding Pitfalls After Rate Reduction

Running up credit card balances again can lead to worsening financial situations.

Boosting Your Credit Score for Better Rates

A higher credit score generally enables access to lower interest rates. While improving credit takes time, certain actions can accelerate progress:

1. Review Your Credit Reports

AnnualCreditReport.com offers free yearly access to reports from the three major bureaus (Equifax, Experian, TransUnion).

Regular reviews help identify errors or fraudulent activity.

2. Dispute Errors and Fraudulent Information

Errors or signs of identity theft should be promptly disputed under the Fair Credit Reporting Act (FCRA), ensuring your report reflects accurate information.

3. Reduce Credit Card Balances

Lowering your credit utilization ratio—the percentage of available credit used—is crucial as it accounts for approximately 30% of your FICO score.

4. Maintain Positive Payment History

Timely payments on credit accounts have a substantial positive impact on your credit score.

Avoiding late payments is vital for improvement.

5. Open New Accounts Strategically

For individuals with thin credit files, secured credit cards or credit-builder loans can establish a record of responsible use.

Being added as an authorized user on a trusted family member’s account may also help.

6. Add Alternative Payment Data

Services like Experian Boost allow utility, rent, and subscription payments to be reported to credit bureaus, enhancing your credit profile when payments are on time.

Final Thoughts: Making Informed Decisions About Credit Card APRs

While the average APR across credit cards tracked by Forbes Advisor stands at roughly 28.70%, your offered rate will depend on personal factors and the card issuer’s policies. Before applying, always carefully review the APR disclosures.

If carrying balances, consider strategies to reduce your APR such as balance transfers, debt consolidation loans, or negotiating directly with your issuer.

Most importantly, paying your full balance each month is the best way to avoid interest charges entirely, allowing you to enjoy credit card benefits without the burden of high APR costs.