Do rewards beat the interest you pay?
The short answer
Rewards pay a small percentage on what you spend. Interest charges a large percentage on what you owe. At the national average, the second number dwarfs the first: the average APR on accounts that assessed interest was 22.36% in the Federal Reserve's most recent reading.1
So the comparison is not close. A card that returns a low single-digit percentage on spending cannot out-earn a rate in the twenties charged on the balance. Rewards pay only when the statement is cleared in full.
How the two numbers compare
Reward rates on general spending are typically expressed as a percentage of each purchase. Interest is expressed as an annual rate applied to the balance, charged daily. The units are the same and the scale is not.
| Item | Applies to | Direction |
|---|---|---|
| Reward on spending | Each purchase | Earns a small percentage |
| Purchase APR | The carried balance | Charges a large percentage |
| Average APR, accounts assessed interest | Balances charged | 22.36% |
| Average APR, all accounts | Stated rates | 21.19% |
Rewards are profitable only when no balance is carried. Where one is carried, the interest charged across the year is what the rewards would have to exceed — and against a rate in the twenties, a low single-digit reward does not get there.
When rewards do work
Where the statement is paid in full every cycle, the reward is a discount on money the household was going to spend anyway. That is the whole of the benefit, and it is real. It stops being real the moment a balance starts revolving.
Sign-up offers
A sign-up bonus is worth taking only if the spending requirement is met without borrowing to meet it. Spending more than planned to reach a threshold can cost more than the bonus, and the cost is charged at the same average rate shown above.
Annual fees
A fee is a fixed cost against a variable benefit. The comparison is the fee against the reward earned across the year on actual spending — not against the headline reward rate, which few cardholders realise in practice.
Where the rules differ
Disclosure requirements and fee limits are set partly federally and partly by state law, and issuer terms change without notice. Confirm current terms with the 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. 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.