The Federal Reserve held off on cutting interest rates during the first quarter of 2026. However, many credit cards continued to cut their rates.
The war with Iran brings inflation pressures which may force the Fed to go slow on rate cuts for a while. Even so, falling credit card rates create opportunities for consumers to get a lower rate without waiting for the Fed.
As always though, not all credit cards are reacting in the same way. That means credit card customers have to keep an eye on which rates represent the best deal in what is likely to be a turbulent time for the economy.
How did credit card rates change in the first quarter of 2026?
CardRatings.com found that the average credit card rate fell by 0.68% during the first quarter of 2026, to 23.44%.
This drop came despite the fact that the Fed made no rate cuts during the quarter. Late last year, the Fed made a series of three rate cuts totaling 0.75%. Some credit cards were slow to react to these cuts, but cards continued cutting rates as the new year began.
This also means that not all cards move in lockstep with each other. That’s why it’s important to shop for the best rates, especially at times when rates are changing frequently.
➤ LEARN MORE:How does the Federal Reserve impact credit card interest?
Did all credit card rates react the same way?
Just shy of half the cards surveyed cut rates in the first quarter of 2026. Most of these cuts were by 0.25%, though a few were 0.50% cuts.
At the other extreme, one card actually raised its rate during the quarter.
As always, one of the best ways to get a good credit card rate is to maintain a strong credit score.
Most credit cards charge a range of different rates. The low end of the range is for people with excellent credit, and the high end is for people with poorer credit. The added interest is intended to compensate the credit card companies for the fact that people with poor credit are more likely to miss payments.
How much of a difference does this make? The latest CardRatings survey found that the best rates offered by credit card companies averaged 18.32%. At the high end of the range, the average was 27.56%. The difference is 9.24% – an indication of how much you can save with excellent credit.
This spread between the highest and lowest rates offered by credit cards widened during the first quarter. This may be because of concern that the economy is weakening. Job growth dropped significantly in 2025. Employment so far in 2026 has been erratic. Recently, soaring gas prices have added more stress on household budgets. With more families under financial stress, credit card companies have to be more cautious.
High credit card balances and rising numbers of late payments add to the worrisome picture. So, credit card companies are less likely to lower rates for their riskiest customers. Some consumers may actually see a rise in interest rates if credit conditions continue to get worse.
➤ SEE MORE:Why is it getting harder for people with low credit scores to get credit?
Are credit card fees still rising?
After some high-profile credit cards raised their fees last year, fees generally settled down in recent months.
The CardRatings.com survey found that as of the start of the second quarter of 2026, the average annual credit card fee was $238.28. That’s up by less than $5 from the previous quarter. That average only applies to cards that charge fees. Just over half the credit cards in our sample did not charge annual fees.
Among cards that do charge annual fees, these range from a low of $39 to a high of $895. Of course, the benefits associated with those fees also varies greatly. It’s important to measure the benefits you get from a credit card if you’re going to be paying a regular fee on it.
Typically, the benefits of cards with annual fees don’t include lower interest rates. Cards that charge an annual fee also tend to charge higher interest rates. The average rate on cards with annual fees was 23.81%, compared with 23.09% for cards that don’t charge those fees.
➤ SEE MORE:Best credit cards with an annual fee
Is this a good time to change credit cards?
Whether it’s interest rates or fees, this is a critical time to take a fresh look at what you’re paying for your credit cards.
Many cards have changed rates over the past six months. That means there may now be better deals on the market than the last time you looked.
Besides comparing interest rates and fees, keep in mind how you’re likely to use the card. For example, interest rates are only important if you expect to carry a balance on your card. As for fees, you should add up the value of any benefits you’re likely to receive as a cardholder to decide if it’s worth the cost.
This is a time of sudden changes in the economy. Be prepared to change your credit card habits in response.
➤ SEE MORE:Best credit card offers
Measuring the average credit card interest rate – methodology
The CardRatings.com study looked at 51 popular credit card offers and their terms at the start of the second quarter of 2026. These offers represent a cross-section of different card types for varying credit qualifications. CardRatings calculated the overall average interest rate and fee. It also broke down the data into different groups such as fee and no-fee cards and minimum and maximum interest rates.
This article was originally published in February 2024, but is updated quarterly to reflect the most recent available data.
