Credit card interest rates resumed dropping in the second half of 2025, closing out the year at 19.7%, about a percentage point lower than the record high set in August of 2024. And while Bankrate expects the rates to continue falling in the new year, it’s not likely that cardholders who carry a balance will feel much relief. The decrease will probably be minor, meaning it will have little impact on most Americans with credit card debt.
Credit card interest rate forecast
Projected 2026 average: 19.4% (0.3% decrease from the current level of 19.7%)
Projected 2026 low: 19.1% (Lowest level since Nov. 2022)
Projected 2026 high: 19.7% (Same level as Jan. 2023)
Credit cards have some of the highest rates of all credit products, and it’s no wonder that almost a quarter (23%) of Americans with credit card debt don’t believe they’ll ever get out of it, according to Bankrate’s 2025 Credit Card Debt Report. Sadly, in 2026, carrying a card balance will remain costly. Bankrate senior industry analyst Ted Rossman projects that the average credit card rate will fall a little more than half a percentage point in 2026. That means the average would only decrease to 19.1% by year’s end — which is still high and only 0.6% lower than the average rate at the end of 2025.
The rate forecast for 2026 is somewhat tricky. A lot depends on who the next Fed Chairman will be after Jerome Powell’s term ends in May, and how they will navigate the political pressure to lower the rates with the need to match policy with incoming data on inflation and jobs. In such an environment, it’s especially important to remember that any forecast comes with a margin of error.
Rossman expects three quarter-point rate cuts from the Federal Reserve this year based on the assumption that inflation will continue to come down and that interest rates can continue to drift back toward a more neutral level, especially as a weakening job market could benefit from lower borrowing rates as a way to stimulate the economy. The Federal Open Market Committee’s median projection for the unemployment rate in 2026 is 4.4%, but Rossman sees it going a few tenths higher, given recently announced corporate layoffs and cutbacks to the federal government workforce. In fact, the November jobs report (released on Dec. 16) revealed that the unemployment rate rose from 4.4% to 4.6%, a four-year high.
The average credit card interest rate isn’t likely to drop quite as much as the federal funds rate, since the credit card average includes new customer offers. Most credit cards have variable rates that consist of a percentage added to the federal funds rate. So, when the Fed rate falls, rates on existing cards follow. But when it comes to new card offers, a card issuer can simply tweak the rate formula — therefore, hiking up interest rates for new cardholders and raising the average. Issuers often charge new customers higher rates to boost profitability, even as industry rules require them to pass along Fed rate cuts to existing customers.
For example, the Prime Rate is currently 6.75%. There’s nothing preventing a card issuer from tweaking a new customer offer from Prime Rate + 13% up to Prime Rate + 13.25% if it wishes to mitigate the impact of a Fed rate cut and make more money from interest charges.
As Bankrate forecasted, the Fed made three rate cuts in 2025, 25 basis points each, addressing improving inflation readings and a weakening job market. Bankrate also forecasted an average credit card interest rate of 19.8% by the end of 2025, which has proven true. Still, the average credit card rate only dropped from 20.15% at the start of 2025 to 19.8% at the end of the year, signaling that we’ll see similar slow progress in 2026.
“It’s also relevant that some credit card issuers (especially credit unions) have been lowering new customer rates for borrowers with higher credit scores but keeping rates steady or even increasing them, in some instances, for those with lower credit scores,” Rossman notes.
It’s best not to rely on the Federal Reserve’s moves to guide your credit card decisions. Credit card interest rates are high and will remain high for some time even if they drop a bit more than expected. If you’re in credit card debt, you aren’t likely to feel any less pressure on your budget as a result of slight decreases in interest rates. With an average credit card rate around 20%, a quarter point here or there doesn’t amount to much.
“TransUnion says the average credit card balance is $6,523. If you make minimum payments at 20%, you’re in debt for 219 months and you end up paying $9,448 in interest,” Rossman says. “At 19%, minimum payments keep you in debt for 217 months and cost you $8,943 in interest. That’s not a big difference. The monthly payment only changes by about $5.”
Instead of counting on rates to fall enough for your monthly payments to make a bigger dent in your card balance, it’s best to find sustainable ways to pay off your credit card debt. A much better approach, according to Rossman, is to apply for a 0% APR card. Currently, you could get a balance transfer card that allows you to pause interest charges for as long as two years. Note that you typically need at least good credit (or a FICO score of 670 or higher) to qualify for a balance transfer card. It’s also crucial to stop charging new purchases to your cards after moving a balance. Otherwise, you’re risking increasing your debt rather than paying it down.
It might also be wise to cut your expenses or take on a side hustle to free up more money for your debt payoff efforts. And if your card balances begin to feel overwhelming, consider working with a reputable nonprofit credit counselor. This is an especially viable option if your credit score is on the lower side and your debt is significant (think $5,000 or more).
Examples of trustworthy credit counseling agencies include Money Management International or GreenPath. They provide debt management plans with interest rates around 6% or 7%. In this case, you’ll also need quite a bit of discipline and patience as such plans typically last four or five years.
And if you’re looking to add a new credit card to your wallet in 2026, it’s also wise to pay attention to interest rates — especially if you think you might end up carrying a balance. Some cards might charge much higher rates than the average. Retail cards, for example, often charge an APR of around 30%. Unless you pay off the balance every month to avoid interest, debt on such a card can quickly become problematic.
Whatever happens with interest rates in the new year, you can find encouragement in the fact that you don’t need to depend on monetary policy. Credit card rates are high and they’re going to stay high. Even when the Fed had a zero interest rate policy during the pandemic, the average credit card charged about 16% interest, which still represented high-cost debt. The best way to use a credit card is to make your personal rate 0%, either by paying in full or taking advantage of a promotional offer. All it takes is a good strategy and your ability to stick to it — no matter what the Fed and your card issuers decide to do.
Methodology
Our methodology for projecting where credit card interest rates are headed in the year ahead combines expectations for the Fed’s benchmark interest rate along with historical patterns in how banks and issuers price interest on new and existing credit products.
To compile our forecast, we reviewed statements from Federal Reserve officials, documentation such as the Fed’s Summary of Economic Projections, investor expectations as measured by the CME FedWatch tool, Bankrate’s decades of interest rate information and other related resources.
