After climbing steadily for several years, the average interest rate consumers pay on credit cards appears to be leveling off. According to new industry data, the average credit card interest rate is projected to decline to 21.52% in 2026, down from 22.25% in 2025 and 22.78% in 2024. While the projected decrease is modest, borrowing costs remain well above historical levels, reflecting the lingering effects of the Federal Reserve’s rate-hiking cycle and the elevated cost of consumer credit.
The data also highlights the relationship between credit card interest rates, the prime rate, and the spread between the two—an important measure of how issuers generate interest income. As inflation continues to pressure household budgets and economic conditions evolve, the trend in credit card pricing offers insight into both the cost of borrowing for consumers and the revenue model that supports card issuers.
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Data for today’s episode is provided by Javelin Strategy & Research’s Report: Rewiring the Credit Card Value Proposition: From Best Card to Best Relationship
Average Credit Card Interest Charged
- 2023 – 22.16%
- 2024 – 22.78%
- 2025 – 22.25%
- 2026-E – 21.52%
Source: Federal Reserve Bank, Javelin Estimates (2026)
About Report
The rapid increase in credit card interest rates over the past several years has strengthened interest revenue for issuers, but it has also created new challenges. Higher borrowing costs, persistent inflation, and mounting financial pressure on consumers are expected to contribute to rising delinquencies and charge-offs, forcing issuers to balance profitability with increasing credit risk. Because funding costs closely follow changes in the prime rate, maintaining healthy net interest margins is becoming more difficult as economic conditions shift.
In response, many card issuers are looking beyond traditional interest income to diversify their revenue streams. Investments in AI-powered customer experiences, enhanced rewards programs, embedded financial services, and other value-added offerings are helping institutions generate more non-interest income while building stronger customer relationships. As the lending environment evolves, issuers that successfully adapt their revenue models and risk management strategies will be better equipped to withstand tighter margins and an increasingly competitive market.
