The average credit card interest rate is 19.73 percent, down from a record-high 20.79 percent. Credit card rates are typically calculated by adding a profit margin to the Prime Rate, which is currently 6.75 percent. The Federal Reserve’s federal funds rate also plays a role in determining credit card rates.

The Credit CARD Act of 2009 changed how credit card rates are set, linking them to indexes like the Prime Rate. Card issuers can adjust rates with 45 days’ notice for new purchases, while existing balances are adjusted based on index changes without special notice. Federal Reserve rate changes impact new and existing balances.

Credit cards have higher interest rates than mortgages or auto loans due to being unsecured debt. Understanding grace periods is crucial for avoiding interest charges, as carrying a balance leads to daily interest accrual. Making only minimum payments on credit card debt can result in years of repayment and significant interest costs.

Different types of credit card interest rates include balance transfer, introductory, cash advance, and penalty APRs. The average credit card rate is calculated based on the midpoint of APR ranges from popular cards. Credit card issuers may offer different rates based on individual creditworthiness.

Bankrate provides resources to better understand credit card interest rates and offers insight into credit card statistics. For more information and research on credit cards, visit Bankrate’s credit card statistics center.

Read more at Yahoo Finance: Current credit card interest rates