The Federal Reserve made no interest rate changes in the second quarter of 2025. However, a few credit cards did change their rates. This underscores the importance of regularly shopping for rates based on the latest information.
A new CardRatings survey found that three credit cards raised their rates during the second quarter, while two lowered them. The vast majority of credit card rates were unchanged during the quarter.
With no recent action by the Fed to cut rates, consumers need to focus on the differences between individual credit card rates if they hope to get a better deal.
High, low and average credit card rates
In the second quarter of 2025, the average credit card rate in the CardRatings survey was 24.31%. This marked a 0.01% increase from the previous quarter.
The average rate rose because three credit cards raised their rates during the quarter – a couple of them by a full percentage point. Why did some cards raise rates?
In today’s uncertain economic environment, credit card companies need to be cautious. Late payment rates on credit cards have risen over the past two years. They’ve reached their highest level since early 2011.
When more consumers fail to make their payments, credit card companies often respond by charging higher interest rates to make up for the added risk. With late payment rates rising, you can see why many credit card companies have been slow to lower their rates, even after the Fed did so last year. Some are even raising rates.
Another factor that is 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.
So, 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 7.82%. This increased slightly in the second quarter. That 7.82% spread shows the extent to which people with weaker credit routinely pay higher rates.
➤ SEE MORE:Why is it getting harder for people with low credit scores to get credit?
Annual credit card fees and 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 $224.72. The highest fee in the survey was $795. And yet, half the cards in the survey charged no annual fee at all.
➤ SEE MORE:Best credit cards with an annual fee
Tips for getting the best credit card deal
Even if the Fed cuts rates in the second half of the year, the responses of credit card companies are 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 how important certain characteristics are. 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 second 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.
