What Interest Rate Is Good for a Credit Card in 2025?

Introduction

Finding a good interest rate for a credit card is a relative goal that changes based on the broader economy and your personal credit history. For many Americans, the difference between a 15% and 25% Annual Percentage Rate (APR) translates to hundreds or even thousands of dollars in annual interest costs. This is particularly true for those who do not pay their balance in full every month.

MoneyAtlas tracks market trends and product terms to help you understand where the benchmarks sit today. A rate that was considered average five years ago might be considered excellent today. This guide breaks down what counts as a competitive rate in the current market, how your credit score dictates the offers you receive, and how to evaluate the cost of borrowing. Understanding these figures is the first step toward using our best credit cards comparison to find a card that fits your financial profile.

The Current Landscape of Credit Card Interest Rates

To determine if a rate is good, you must first know the average. Recent data on what consumers pay on their credit cards shows that the average APR for all credit card accounts is hovering near record highs. As of mid-2025, the average rate for cards that assess interest is approximately 23% to 25%.

These figures represent a significant increase from previous decades. The primary driver behind these elevated rates is the Federal Funds Rate, which the Federal Reserve uses to control inflation. Most credit cards have a variable APR, which means the rate is tied directly to the U.S. Prime Rate. When the Prime Rate goes up, credit card interest rates almost always follow within one or two billing cycles.

Defining Good, Average, and High Rates

Because the market is currently in a high-rate environment, the definition of a good rate has shifted upward. Here is a general breakdown of how rates are categorized today:

• Excellent (Under 15%): These rates are rare for standard rewards cards. They are typically reserved for members of credit unions or specific "low-rate" cards that do not offer cash back or travel points.
• Good (15% to 20%): A rate in this range is highly competitive for someone with a strong credit score. It is well below the national average and significantly reduces the cost of carrying a balance.
• Average (21% to 25%): Most new card offers for individuals with good credit fall into this bracket. While common, these rates can still be expensive if debt is not managed carefully.
• High (26% to 30%+): Rates in this range are common for retail store cards, cards for building credit, and rewards cards for those with fair or poor credit.

Best For Luxury Travel

Learn More

American Express Platinum Card®

4.9MoneyAtlas Rating

Read our full review

Learn More

Rates & Fees

How Your Credit Score Influences Your Rate

Your credit score is the single most important factor an issuer uses to determine your APR. When you apply for a card, the lender performs a risk assessment. A higher credit score suggests you are less likely to default, allowing the lender to offer a lower interest rate as an incentive.

MoneyAtlas compares over 1,500 products, and the data consistently shows a direct correlation between FICO scores and the APR range offered to applicants. While every issuer has its own internal scoring model, the following table provides a general estimate of the rates available based on credit tiers.

For someone with a credit score below 670, finding a "good" rate is difficult. In these cases, the focus often shifts from finding a low APR to finding a card that helps rebuild credit so that a lower rate can be secured in the future.

The Different Types of APR Explained

When you read the fine print of a credit card agreement, you will notice that there is rarely just one interest rate. Different types of transactions trigger different APRs. To understand if your card has a good rate, you must look at all of the following categories.

Purchase APR

This is the standard rate applied to the things you buy. When people ask what a good interest rate is, they are usually referring to the purchase APR. This rate only applies if you do not pay your statement balance in full by the due date.

Balance Transfer APR

This rate applies to debt moved from one credit card to another. Many cards offer a 0% introductory APR on balance transfers for 12 to 21 months. After that period ends, the remaining balance will accrue interest at the standard purchase APR. A good balance transfer offer is one that has a 0% rate and a low transfer fee, typically 3% to 5%.

If you are comparing payoff-focused offers, start with the balance transfer credit card comparison to see how different intro periods and fees stack up.

Cash Advance APR

If you use your credit card to get cash from an ATM, you will likely be charged a cash advance APR. This rate is almost always significantly higher than the purchase APR, often reaching 29.99% or higher. Additionally, there is usually no grace period for cash advances. Interest begins accruing the moment you take the money.

Penalty APR

If you are more than 60 days late on a payment, the issuer may increase your interest rate to a penalty APR. This rate can be as high as 29.99% and may stay in effect indefinitely or until you make six consecutive on-time payments. A penalty APR is never a good rate and should be avoided at all costs.

Introductory APR

Many cards attract new customers with a 0% introductory APR for a set period. These offers are technically the best rates available because they allow you to borrow money for free, provided you follow the rules. However, it is essential to have a plan to pay off the balance before the intro period expires.

Why Credit Union Rates Are Often Better

If your primary goal is to find the lowest possible interest rate, credit unions are often the best place to look. Unlike commercial banks, which are owned by shareholders and driven by profit, credit unions are member-owned cooperatives.

Federal credit unions have a legal interest rate cap of 18% on most loans, including credit cards. This is a significant advantage when the national average at major banks is 24%. Even as market rates rise, the NCUA maintains this ceiling to protect members.

For a borrower who frequently carries a balance, moving from a bank card at 25% to a credit union card at 18% can save a significant amount of money. MoneyAtlas makes it easier to compare these types of institutions side by side to see which structure offers the best value for your specific spending habits.

How to Calculate the Real Cost of Your Interest Rate

A percentage like 24% can feel abstract until you see the dollar amount it adds to your bill. Credit card interest is usually compounded daily. This means the bank calculates your interest every day based on your current balance and adds it to the total.

To see what your rate actually costs you, follow these steps:

Example Scenario:
Imagine you have a $5,000 balance on a card with a 24% APR.

• Daily Rate: 0.0657%
• Average Daily Balance: $5,000
• Daily Interest: $3.28
• Monthly Interest (30 days): $98.40

In this example, nearly $100 of your monthly payment goes toward interest alone. If your monthly payment is only $150, only $51.60 is actually reducing your debt. This illustrates why a "good" rate is so important for those who cannot pay in full.

Is a 10% National Interest Rate Cap Coming?

There has been significant discussion regarding a proposed federal law that would cap all credit card interest rates at 10%. Proponents argue that this would prevent predatory lending and help Americans escape debt cycles.

However, many economists and lenders warn that a 10% cap would have unintended consequences. If lenders are limited to a 10% return, they may become extremely selective about who they approve. This could result in:

• Stricter credit score requirements.
• Lower credit limits for existing customers.
• The elimination of rewards programs like cash back and travel points.
• Higher annual fees to offset the loss of interest income.

While the proposal highlights the public's frustration with high rates, it has not yet become law. For now, consumers must navigate the existing market, where "good" rates are still significantly higher than 10%.

Strategies for Getting a Better Rate

If you find that your current APR is well above the national average, you do not have to accept it as permanent. There are several ways to improve your situation.

Negotiate with Your Current Issuer

If your credit score has improved since you first opened the card, or if you have a long history of on-time payments, you can call the customer service number on the back of your card. Many issuers will lower your APR if you ask.

When you call, mention that you have seen lower offers from competitors. This gives the representative a reason to provide a retention offer. While not every bank allows for rate negotiations, many do, and the process takes only a few minutes.

Use a Balance Transfer Card

If you are currently paying 28% interest on a high balance, moving that debt to a card with a 0% introductory APR can save you hundreds of dollars. This strategy works best if you can pay off the entire balance within the promotional window, which usually lasts between 12 and 18 months. Note that these cards usually require a credit score of 670 or higher.

Consider Debt Consolidation

For those with very high balances across multiple cards, a personal loan might offer a better rate than a credit card. Personal loans are installment loans with fixed interest rates and fixed monthly payments.

Because the lender has a set schedule for repayment, the interest rates are often lower than revolving credit card rates. Someone with good credit might find a personal loan at 12%, which is far better than a credit card at 24%.

If you want to compare that option directly, browse the personal loan comparison before deciding how to consolidate debt.

Improve Your Credit Profile

Ultimately, the best way to secure a good rate is to improve your creditworthiness. Focus on these two factors:

• Payment History: Always make at least the minimum payment on time. This accounts for 35% of your credit score.
• Credit Utilization: Keep your balances below 30% of your total credit limits. This accounts for 30% of your score.

When Does the Interest Rate Not Matter?

It is worth noting that for a specific group of consumers, the APR is almost entirely irrelevant. If you pay your statement balance in full every single month by the due date, you are never charged interest on purchases. This is known as the grace period.

In this scenario, a card with a "bad" interest rate of 29% is functionally identical to a card with a "good" rate of 15%. If you are a "transactor" who pays in full, you should ignore the APR and focus instead on:

• Rewards Rates: Higher cash back or point multiples in categories like groceries or travel.
• Sign-up Bonuses: One-time incentives for reaching a spending threshold.
• Annual Fees: Whether the benefits of the card outweigh the yearly cost.
• Perks: Features like cell phone protection, airport lounge access, or extended warranties.

If rewards matter more than borrowing costs, you can also compare cash back credit cards to see which cards put more value back in your wallet.

However, life is unpredictable. Even if you plan to pay in full, having a card with a competitive interest rate provides a safety net in case of an emergency expense that requires you to carry a balance for a few months.

Comparing Your Options on MoneyAtlas

With thousands of credit cards available, the search for a good interest rate can be overwhelming. Some cards offer low rates but no rewards, while others offer 5% cash back but charge nearly 30% in interest.

MoneyAtlas provides the tools to simplify this decision. By using side-by-side comparison tables, you can filter cards by their APR ranges, introductory offers, and credit score requirements. We recommend looking at cards in the "Low Interest" category if you anticipate carrying a balance, as these are designed specifically to minimize interest costs.

When comparing, always look for the "Regular APR" section. This will show you the variable rate that applies after any introductory periods end. By looking at these figures objectively, you can choose a product that aligns with your financial reality rather than just the marketing highlights.

If you want a broader starting point, browse the best credit cards comparison and filter from there.

Summary of Key Benchmarks

To recap, if you are shopping for a new card or evaluating your current wallet, keep these numbers in mind:

• National Average: ~24% to 25%
• Target for Excellent Credit: 18% or lower
• Target for Good Credit: 22% or lower
• Credit Union Cap: 18% (Federal)
• Promotional Target: 0% for 12+ months

The "good" rate for you is ultimately the lowest one you can qualify for based on your current credit score. By monitoring your score and comparing offers regularly, you can ensure you are not overpaying for the convenience of using credit.

FAQ