Whether a 28% Annual Percentage Rate (APR) is high depends on the current economic environment and your specific credit profile. In a market where the average credit card interest rate often hovers between 24% and 25%, a 28% rate is technically above average. For someone with an excellent credit score, this rate would be considered quite high, while for someone with limited credit history or a lower score, it might be the standard offer. MoneyAtlas tracks these shifts in the lending landscape to help you determine if a card fits your financial needs. This article examines how interest rates are set, what a 28% APR costs you in real dollars, and how to compare cards to find more competitive options. Understanding these mechanics is the first step toward minimizing the cost of borrowing.
To determine if a rate is high, it is necessary to look at the broader market. Credit card interest rates are not static. They generally move in tandem with the federal funds rate. When the Federal Reserve adjusts rates, credit card issuers usually follow suit within one or two billing cycles.
Currently, the average APR on new credit card offers sits around 23.8%. This means a 28% APR is roughly 4% higher than the typical offer. While 4% might sound small, it represents a significant increase in the total cost of debt when a balance is carried over several months or years. For more context, review the latest information on average credit card interest rates.
Most credit cards use a variable APR. This rate is usually the Prime Rate plus a specific margin determined by the bank. For example, if the Prime Rate is 8.5% and your card has a margin of 19.5%, your total APR is 28%.
Because the Prime Rate can change, your 28% APR could climb even higher if the Federal Reserve raises interest rates. Conversely, if the Fed cuts rates, your APR might drop, though issuers are often faster to raise rates than they are to lower them.
A 28% rate looks very different depending on your credit score. Lenders use credit scores to assess risk. The higher the perceived risk, the higher the interest rate they charge.
Interest on credit cards is usually compounded daily. This means the bank calculates how much you owe every day and adds that interest to the balance. Over time, you end up paying interest on the interest you already owe.
To understand the impact of a 28% rate, it helps to see the math behind a typical balance. If you carry a $5,000 balance at 28% APR and only make a fixed monthly payment, a large portion of that payment goes toward interest rather than reducing the principal.
To find out how much interest you are charged daily, you divide the APR by 365 days.
28% / 365 = 0.0767% per day.
If you have a $5,000 balance, the daily interest charge is roughly $3.84. Over a 30 day billing cycle, that adds up to approximately $115 in interest charges alone. If your minimum payment is $150, only $35 of that payment actually reduces your debt.
Consider a $2,000 balance on a card with a 28% APR. If you only make a minimum payment of 3% of the balance (starting at $60), it would take over 10 years to pay off the debt. You would also pay more in interest than the original $2,000 you spent.
For someone in this position, comparing balance transfer credit cards or personal loans is a practical step. MoneyAtlas provides tools to compare these options side by side to see which might offer the most relief from high interest costs.
A credit card rarely has just one APR. When you see "28% APR" in the fine print, that is usually the Purchase APR. However, other transactions may carry even higher rates. You can also read more about when credit card interest is charged.
If you use your credit card at an ATM to withdraw cash, you are usually charged a Cash Advance APR. This rate is frequently higher than the purchase rate, often reaching 29.99%. Furthermore, cash advances usually do not have a grace period. Interest begins accruing the second the cash is in your hand.
If you miss a payment or a payment is returned, some issuers may trigger a Penalty APR. This rate can be as high as 29.99% or more. This rate can stay on your account indefinitely or for a set period, such as six consecutive months of on time payments.
Many cards offer a 0% introductory APR for 12 to 21 months. These are primarily available for balance transfers or new purchases. It is important to know what the rate will jump to once the promotion ends. If a card moves from 0% to 28% after a year, any remaining balance will suddenly become very expensive.
Certain categories of credit cards are known for having higher than average APRs. If you are looking at a card in one of these categories, a 28% APR might be the standard.
Store cards, such as those for clothing retailers or big box stores, often have high APRs. It is common to see rates between 27% and 31% on these cards. While they often offer discounts on your first purchase or loyalty points, they are generally not suitable for carrying a balance.
Cards that offer heavy rewards, such as 5% cash back or airline miles, often have higher APRs than "plain vanilla" cards. The bank uses the interest income to help fund the rewards program. If you pay your balance in full every month, the 28% APR does not matter. However, if you carry a balance, the interest charges will likely outweigh the value of any rewards you earn.
Cards designed for people with low credit scores often have the highest rates. These cards are viewed as high risk by the lender. A 28% APR on a secured card or a "starter" card is a frequent occurrence. For these users, the goal is often to use the card responsibly to build credit and eventually qualify for a lower rate card.
If you currently have a card with a 28% APR, there are several ways to manage the cost or move toward a more affordable option. For additional repayment ideas, explore this credit card payment strategy guide.
Pay the Balance in Full
The most effective way to handle a high APR is to never pay it. Most cards offer a grace period of 21 to 25 days. If you pay your statement balance in full by the due date every month, the bank does not charge you interest on purchases. This effectively makes your APR 0% regardless of what the contract says.
Negotiate with the Issuer
If your credit score has improved since you first got the card, you can call the customer service number on the back of your card and ask for a rate reduction. This is a common request. You can mention that you have seen other offers with lower rates. While not guaranteed, some issuers will lower your rate by 2% to 5% to keep you as a customer.
Look into Credit Unions
Federal credit unions have a legal cap on the APR they can charge. Currently, the National Credit Union Administration (NCUA) limits the interest rate on most credit union cards to 18%. Even if you have average credit, an 18% rate is a massive improvement over 28%.
Utilize a Balance Transfer Card
For those carrying significant debt at 28%, moving that balance to a new card with a 0% introductory APR can save hundreds or thousands of dollars. These promotions usually last between 12 and 18 months. Be aware that most cards charge a balance transfer fee, often 3% to 5% of the amount moved. You can compare balance transfer offers based on promotional periods, fees, and ongoing APRs.
Consider a Personal Loan
If you cannot find a 0% balance transfer offer, a personal loan might still provide a lower rate. Personal loans are installment debt with fixed payments. For someone with good credit, personal loan rates might be between 10% and 15%, which is much lower than 28%.
When you are ready to look for a new card, it is important to compare more than just the headline interest rate. MoneyAtlas makes it easier to look at multiple factors side by side so you can see the full cost of ownership. Start with a comparison of the best credit cards to review available offers.
Most cards do not advertise a single rate. Instead, they show a range, such as 19.99% to 28.99%. The rate you actually get depends on your creditworthiness. If you have a lower score, you should expect to be at the higher end of that range.
A card with a 22% APR and a $95 annual fee might actually be more expensive than a card with a 28% APR and no annual fee, depending on how much you spend and whether you carry a balance. Look for:
Many issuers now offer a "check for offers" or pre-qualification tool. This allows you to see what APR you might qualify for without a hard pull on your credit report. This is a useful way to see if you can beat a 28% rate before you officially apply.
It is worth noting that a "high" rate is relative to the Prime Rate. In 2019, when the Prime Rate was much lower, a 28% APR would have been considered predatory for almost any borrower. In the current high rate environment, 28% has become more commonplace.
MoneyAtlas monitors these trends to help you understand when it is a good time to shop for a new rate. If the Federal Reserve begins to lower the benchmark interest rate, you should see new credit card offers with lower APR ranges. This is often the best time to look for a replacement for a high interest card. For more background, read about typical credit card interest rates.
Because most cards are variable, your 28% rate can move without your permission if the index it is tied to changes. The only way to get a truly fixed rate is often through a personal loan or a specialized credit card from a small credit union. For most major bank cards, you must be prepared for the rate to fluctuate.
In the US, there is no federal cap on credit card interest rates for most banks. Some states have "usury laws," but most major card issuers are based in states like South Dakota or Delaware where these caps are extremely high or non-existent. This is why you can see rates climb as high as 36% on some subprime cards.
If you are looking at a credit card offer with a 28% APR, consider these final points before signing:
By keeping these factors in mind and using comparison tools, you can avoid paying more than necessary for your credit.
Compare the cards our editors rate highest right now, side by side, with the fees and rewards that matter.
Compare the best credit cardsArticles and reviews from the MoneyAtlas editorial team — independent research on credit cards, banking, loans, insurance, and investing.
Deciding which card is better: American Express Gold or Platinum? Compare fees, 4X dining rewards, and luxury travel perks to find your perfect match.
Should I get an American Express Gold card? Explore the 4X rewards on dining and groceries vs. the $325 fee to see if this premium card fits your budget.
Learn how to get the American Express Gold Card with our guide on credit score requirements, income, and the 'Apply with Confidence' tool. Apply today!