What APR means
A credit card's interest rate is the price you pay to borrow money, typically expressed as a yearly rate called the annual percentage rate, or APR. CFPB APR explanation
For billing cycles and other account terms, see how credit cards work.
Types of APR on one card
A card can have different APRs for purchases, cash advances, and balance transfers. CFPB APR categories
Your statement must show each category with a different APR and the balance in that category. Check the rate attached to the kind of transaction you plan to make. CFPB statement requirements
Even if you have a purchase grace period, cash advances generally accrue interest from the transaction date. CFPB cash-advance interest
How daily interest is calculated
Many issuers calculate interest using an average daily balance. CFPB interest calculation
Some issuers calculate a daily periodic rate by dividing APR by 360 or 365, depending on the issuer. CFPB daily periodic rate
With daily compounding, the issuer multiplies the daily rate by the amount owed at the end of each day and adds the interest to the balance used for the next day's calculation. CFPB daily compounding
Hypothetical illustration, not a real card rate: assume a 24% APR, a 365-day divisor, and a $1,000 balance subject to interest. These are illustrative inputs for the CFPB's calculation method. CFPB method used for this illustration
- Daily rate: 24% ÷ 365 ≈ 0.0658% per day. Hypothetical calculation using the CFPB method
- Interest for one day: $1,000 × (0.24 ÷ 365) ≈ $0.66. Hypothetical calculation using the CFPB method
Use your own agreement's APR and calculation method when checking your interest.
What the average APR is right now
The Federal Reserve's October 7, 2026 G.19 release reports these commercial bank credit card plan interest rates for August 2026; the figures are preliminary and not seasonally adjusted. Federal Reserve G.19 release
| Measure | Rate | What it measures |
|---|---|---|
| All accounts | 21.19% | The stated APR averaged across all credit card accounts at reporting banks. Federal Reserve rates and definitions |
| Accounts assessed interest | 22.36% | The annualized ratio of finance charges to average daily balances, excluding accounts not charged interest. Federal Reserve rates and definitions |
These are averages that update over time; your own rate depends on your cardholder agreement. Federal Reserve G.19 averages
When your issuer can raise your APR
Regulation Z generally bars APR increases except under listed exceptions, including these. Regulation Z
- Promotions: A temporary rate disclosed in advance may end after at least six months; the disclosed replacement rate then applies. Regulation Z
- Variable APRs: A rise in a publicly available index outside the issuer's control can raise your APR, without increasing the margin under this exception. Regulation Z
- Advance notice: Certain increases require written notice at least 45 days before taking effect, per §1026.9(c)/(g). Regulation Z commentary New rates can cover new transactions, excluding those before or within 14 days after notice; this exception cannot apply during the account's first year. Regulation Z
- Late payments: If the minimum is not received within 60 days after its due date, the issuer may raise existing balances' APR after notice stating why. Regulation Z The rate on those earlier balances must go back down after six consecutive minimum payments received on time, starting with the first payment due after the increase. Regulation Z
How to lower what APR costs you
- Pay in full by the due date when possible. On most cards, paying the balance in full each month by the due date avoids purchase interest. CFPB avoiding purchase interest
- Consider paying earlier when interest is accruing daily. Applying the daily-rate calculation to a smaller balance means less interest for that day, so reducing the balance sooner can reduce interest costs. CFPB daily-rate method
- Check statement categories. Review each APR alongside its balance; your statement must show the categories with different APRs. CFPB statement requirements
- Ask your issuer. Request a lower APR and ask which balances any proposed rate would cover. Get the terms before deciding what to do.
For help choosing where to direct extra debt payments, see debt snowball versus avalanche.
This article is educational information, not financial advice. Check your own cardholder agreement and statements for the terms that apply to you.
