What an APR actually charges you
The short answer
The rate printed on your card is an annual figure, but the charge is applied daily to the balance you carry. That one mechanic is why a balance grows faster than the percentage suggests. In the Federal Reserve's most recent reading, the average APR across all credit card accounts was 21.19%, while the average on accounts that actually assessed interest was 22.36%.1
Those are two different measures of the same market. The first averages the stated rate on every account, including ones paid in full every month. The second is the annualised ratio of finance charges to the balances those charges were assessed against — in other words, what people who carry a balance actually pay.
| Period | All accounts | Accounts assessed interest |
|---|---|---|
| 2025 Q1 | 21.00% | 21.52% |
| 2025 Q3 | 21.39% | 22.83% |
| 2026 Q1 | 21.00% | 21.52% |
| 2026 Q2 | 20.94% | 22.15% |
| 2026 Q3 | 21.19% | 22.36% |
How the daily charge is calculated
Take the annual rate and divide it by 365. At the national average of 22.36%, that gives a daily rate of about 0.0613%. Multiply it by the balance you carry, then by the number of days it stays unpaid. The charge compounds as well: unpaid interest is added back to the balance, so the next day's charge is calculated on a larger figure.
Worked through, this is why the balance grows faster than the annual percentage suggests. A rate in the low twenties charged daily on a carried balance produces a finance charge that is substantially more than the rate applied once at year end.
Daily rate = APR ÷ 365. Charge = daily rate × balance × days unpaid. Unpaid interest is added back to the balance, so the next cycle charges interest on interest.
Purchase rate versus cash advance rate
Cash advances usually carry a higher rate than purchases and, in most cases, no grace period at all. Treating the two as one number is an expensive mistake: the quoted rate may describe purchases, while money withdrawn at an ATM starts costing you the same day.
Why the average is not your rate
An average describes a market, not your account. Issuers price each account on the borrower's credit profile, so a cardholder with a long clean history may pay several points below the average, and someone rebuilding credit well above it. The figure is a starting point for comparison, not a forecast of your statement.
Where state law comes in
Disclosure requirements and fee limits sit partly in federal consumer protection rules and partly in state law. What must appear on your statement, and when, can differ depending on where you live. Confirm specifics with your issuer rather than relying on a national average.
1. Federal Reserve Board, Consumer Credit (G.19), release dated 7 October 2026. Average APR across all credit card accounts and on accounts assessed interest, 2025 Q1 – 2026 Q3. federalreserve.gov — checked 31 October 2026.
Figures are national averages published by the Federal Reserve and change with every monthly release. The date above is the release used for this page.