There was good news and bad news for credit card customers in the third quarter of 2025. The good news was that the average credit card rate fell. The bad news was that the average annual fee on credit cards rose.
A rate cut by the Federal Reserve prompted rate cuts by several credit cards. Also during the quarter, a few cards hiked their annual fees.
The latest CardRatings survey found that these changes affected some, but not all, credit cards during the third quarter. That underscores the importance of regularly checking individual credit card details to find the best deals.
High, low and average credit card rates
In the third quarter of 2025, the average credit card rate in the CardRatings survey was 24.22%. This marked a 0.09% decrease from the previous quarter.
The Federal Reserve cut interest rates by 0.25% in September. Not all credit cards followed suit – at least not right away. CardRatings found that just 15 out of 50 credit cards in the survey cut their rates during the third quarter. Most of the cards that reduced rates did so by the same amount as the 0.25% Fed rate cut. However, a few slashed rates by more than 1%.
The difference in reactions by credit card companies is a sign of how uncertain today’s economy is. Even though the Fed is cutting rates, credit card companies have to be concerned about the risks they face. Recent job market numbers have been weak. Late payment rates on credit cards have been rising sharply for over two years now. As a result, they’ve reached their highest level since early 2011.
With more consumers failing to keep up with their payments, some credit card companies may be keeping their rates high to make up for the added risk. That may explain why not all credit cards followed the Fed’s lead by cutting rates.
Another factor that’s concerning to credit card companies is inflation. With the threat that tariffs could make inflation worse, credit card companies are likely to be more reluctant to reduce the interest rates they charge.
Differences in how credit cards respond to these conditions can be seen in the range of rates charged. Rates in the third quarter CardRatings survey ranged from a low of 16.99% to a high of 30.74%.
That wide range means the real difference maker isn’t what the Fed or credit card companies in general are doing to change rates. It’s much more important which card you’re able to get.
➤ LEARN MORE:How does the Federal Reserve impact credit card interest?
Impact of credit score on credit card interest rates
A big factor that determines the interest rate different customers pay is their credit score. Again, credit card companies charge higher interest rates to make up for higher risk. So, customers with low credit scores tend to pay higher interest rates.
You’ve probably noticed that many credit cards advertise a range of rates, from low to high. These generally represent the difference between the best rates they offer customers with excellent credit and the higher rates given to people with weaker credit.
On average, the spread between the low-end and high-end rates on credit cards is 8.17%. This increased by 0.35% in the third quarter. That widening spread means it’s becoming more important to maintain good credit in order to get competitive rates.
➤ SEE MORE:Why is it getting harder for people with low credit scores to get credit?
Annual credit card fees and their impact on rates
Besides varying interest rates, another important difference to watch for in credit card terms is the annual fee.
The average annual fee charged on credit cards is $244.08. That’s up by $19.36 since the previous survey. The highest annual fee in this quarter’s survey was $895. At the other extreme, 52% of the cards in the survey charged no annual fee.
➤ SEE MORE:Best credit cards with an annual fee
Tips for getting the best credit card deal
As seen in the third quarter, when the Fed cuts interest rates, the responses of credit card companies is likely to vary. Regardless of what the Fed does, expect differences between credit card rates to continue to be substantial. That makes it especially important to look at which individual cards offer the best deals.
Beyond interest rates, there are other considerations in choosing a credit card. The following are some tips for getting the best deal for your needs:
- Decide how you’re going to use the card. How you use the card affects the importance of certain characteristics. For example, if you don’t typically carry a balance, interest rates are less important than if you do. Also, keep in mind how heavily you plan to use the card, and whether there are certain things, like travel, you’re likely to use the card for most.
- Consider rates, fees and rewards. Once you plan for how you’ll use the card, you can estimate the impact of interest rates, fees and rewards on your account. That will help you measure the trade-offs among these factors for your planned usage.
- Shop around to find the best terms for your situation. As the study found, there are wide ranges of fees and interest rates out there. A little comparison shopping can make a bigger difference than Fed rate cuts typically do.
- Work on your credit. The wide range of interest rates also indicates how much more you might have to pay if you have poor credit. This spread has been widening as credit conditions deteriorate. Working to improve your credit score can pay off by qualifying you for better credit card terms.
➤ SEE MORE:Best credit card offers
Measuring the average credit card interest rate – methodology
The CardRatings.com study looked at 50 popular credit card offers and their terms at the end of the third quarter of 2025. 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.
