Interest Rates by Credit Quality
Credit quality varies depending on the type of scoring used, but the most common credit scores used by credit card issuers are FICO scores.
Interest Rates by Types of Credit Cards
Interest rates for individual credit cards vary based on the type of card and the risk-based pricing policies of the specific credit card issuer.
Trend in Prime Interest Rate
Credit card interest rates are primarily dependent on the prime interest rate plus a margin that varies by product type and the credit quality of the individual account holder.
Trend in Delinquency Rate
The delinquency rates on credit cards are defined as accounts that are 90 days or more past due, and have been below 3% in recent years, peaking at 2.76% in January 2020. With inflation rising to a 40-year high due to supply chain issues and increased consumer demand, the delinquency rate significantly increased to 2.77% at the end of the second quarter of 2023.
Trend in Credit Card Debt
Total outstanding credit card debt surpassed consumer borrowing of over $1 trillion before the pandemic and sharply declined to $970 billion in January 2021. Since then, credit card debt has risen again to exceed pre-pandemic levels, reaching over $1.29 trillion in the most recent quarter reported by the Federal Reserve, due to continued strong consumer demand and credit card spending.
Study Methodology
Investopedia tracks individual credit card interest rates for over 300 publicly available cards from 43 of the largest banks and issuers in the country. Most credit card rates are published as a range from low to high depending on the applicant’s credit score. When determining average rates by credit quality, card type, or issuer, Investopedia calculates the mean of the advertised interest rate ranges and also computes the average of the lowest and highest rates expressed by those ranges.
Source: https://www.investopedia.com/average-credit-card-interest-rate-5076674
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