Understanding Credit Card Interest Rates

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Understanding Credit Card Interest Rates

Credit card interest rates technically only apply when you have to carry over your balance instead of paying it off by or before the due date every month. At some point, however, most people end up carrying a balance on their credit cards, which is why it is a good idea to have an understanding of your interest rates.

Unsecured Revolving Debt 

Before we dive in, it’s important to understand that credit cards are unsecured revolving debt. They are “unsecured,” as you’re borrowing money without giving up any collateral. Essentially, the issuer of your credit card is taking a risk by giving you the card, as they won’t be able to get anything from you if you’re unable to pay it back.

For this reason, they often have high interest rates on their credit cards.


Your credit card interest rate will likely be expressed as APR or Annual Percentage Rate. This percentage is what you would pay in interest over the course of a year. The term confuses many people, as interest for credit cards is charged daily when you carry over a balance from one month to the next.

This is where your ADPR or Average Daily Periodic Rate comes in. This interest rate is what you are being charged every day. Simply divide your APR by 365 to find this number.

Understanding Credit Card Interest Rates

Understanding Credit Card Interest Rates

What Is The Average Credit Card Interest Rate? 

According to WalletHub, the average credit card interest rate for 2022 is 18.32%.

With that said, credit card issuers can use APRs as high as 29.99%, and they often do. You’ll often see APRs around 20%, however, even if you have really good credit.

Super high credit card interest rates are often seen on credit cards for penalty rates or bad credit. These interest rates are often implemented if a consumer is 30 days late or more on making a payment.

If you default on a different account or go above your credit limit, you may also be charged this high interest rate.

Can I Ask For A Lower Interest Rate?

We’ve talked a lot about asking for lower interest rates on our blog before, as it is one of the easiest tactics for “hacking” your credit. It’s as simple as calling your credit card issuer and talking to their customer service department to see if you can get a lower APR.

It’s surprising that more people don’t utilize this easy method, as most consumers who call are successful in obtaining the lower rate they seek out.

Final Thoughts

Here at Personal Tradelines, we aim to help our clients reach their credit goals. Beyond providing helpful information surrounding credit cards, we also act as a platform for authorized user tradelines, which can help build consumer credit.

We can’t make any promises, as that is not how the business of tradelines works. However, we do have a successful track record and a company policy built on reliability that extends to each and every one of our customers.

If you are ready to start your journey to better credit, make sure to get in touch with us