At a 22.15% card APR, $5,000 on minimums takes 21 years to clear
The Fed's second-quarter 2026 card-rate reading is 22.15% on accounts charged interest. What that does to a $5,000 balance, month by month, and how prime moves it.
- What happened
- The Federal Reserve's G.19 release of September 8, 2026 put the average interest rate on credit card accounts assessed interest at 22.15% in the second quarter of 2026, and revolving consumer credit at $1,357.2 billion in July 2026.
- Why
- Almost all general purpose card rates are tied to a variable index, usually the bank prime rate, which banks typically set at 3 percentage points above the top of the Fed's target range. The prime rate moved from 6.75% to 7.00% on September 17, 2026, the day after the FOMC raised its target range to 3.75%–4.00%.
- The numbers that matter
- 22.15%Average APR, card accounts assessed interest, Q2 2026$1,357.2bnRevolving consumer credit, July 2026 (preliminary)7.00%Bank prime loan rate from September 17, 2026253 monthsTo clear $5,000 at 22.15% paying 1% of balance plus interest
- Why it matters
- At 22.15%, a $5,000 balance carried for a year costs $1,107.48 in interest at APR ÷ 12. A minimum payment set at 1% of the balance plus interest takes 21 years and one month to clear it and adds $8,372.78 in interest.
- What happens nextas we saw it on 7 Oct 2026
- The Board says the G.19 is generally issued on the fifth business day of each month. This piece uses the September 8, 2026 release, the latest to carry second-quarter 2026 card rates.
The rate paid by people who carry a balance rose 5.70 points between 2021 and 2023 and has stayed above 22% since.
| 2021 | 16.4% |
|---|---|
| 2022 | 17.9% |
| 2023 | 22.1% |
| 2024 | 22.9% |
| 2025 | 22.3% |
| Q2 2026 | 22.1% |
The Federal Reserve's quarterly survey of card-issuing banks put the average interest rate on credit card accounts that were actually charged interest at 22.15% in the second quarter of 2026. On a $5,000 balance that is $92.29 of interest in a single month. Pay only a minimum of 1% of the balance plus that month's interest, and the balance takes 253 months to clear: 21 years and one month, with $8,372.78 of interest on top of the original $5,000.
That is not a forecast. It is the published rate run forward under stated assumptions, and every input is below.
Two averages, and the one that applies to people who carry a balance
In the Terms of Credit table of the G.19 Consumer Credit release of September 8, 2026, the average commercial bank rate on credit card plans was 20.94% for all accounts and 22.15% for accounts assessed interest in the second quarter of 2026. In the first quarter of 2026 the two figures were 21.00% and 21.52%. The columns for June and July 2026 read “n.a.”: the card rates are quarterly.
The two numbers answer different questions. The Board's notes to the release say the all-accounts rate “is the stated APR averaged across all credit card accounts at all reporting banks”. The rate for accounts assessed interest “is the annualized ratio of total finance charges at all reporting banks to the total average daily balances against which finance charges were assessed”.
The Board describes the all-accounts rate as the average APR offered to all cardholders, “independent of the manner in which the accounts are actually used”. The rate on accounts assessed interest “measures the average finance rate for cardholders who revolve their balances”. The data come from the Quarterly Report of Credit Card Interest Rates (FR 2835a), a voluntary survey of a panel of 50 card-issuing banks; the Board says that “as of November 2011, approximately 40 banks report regularly”.
Someone who pays the statement in full each month is in the first average but pays none of it. Someone who carries a balance is closer to the second. That is why the worked example below uses 22.15%.
| Period | All accounts | Accounts assessed interest |
|---|---|---|
| 2021 | 14.60 | 16.45 |
| 2022 | 16.26 | 17.91 |
| 2023 | 20.90 | 22.15 |
| 2024 | 21.58 | 22.89 |
| 2025 | 21.22 | 22.32 |
| Q2 2025 | 21.16 | 22.25 |
| Q1 2026 | 21.00 | 21.52 |
| Q2 2026 | 20.94 | 22.15 |
How much is being carried
Seasonally adjusted revolving consumer credit was $1,357.2 billion in July 2026 (preliminary), against $1,354.4 billion in June. It grew at a seasonally adjusted annual rate of 2.5% in July and 4.9% in the second quarter of 2026. Total consumer credit, which excludes loans secured by real estate, was $5,186.2 billion in July.
End of Q2 2026, $1,354.4 billion, less end of Q2 2025, $1,301.7 billion, is $52.7 billion, a rise of 4.0%. Revolving credit was 26.2% of total consumer credit in July 2026 ($1,357.2 billion ÷ $5,186.2 billion).
Revolving is not quite the same as credit cards. The Board notes that card loans “comprise most of revolving consumer credit” but that prearranged overdraft plans are included too.
The arithmetic on $5,000
The method here is the simplest honest one: the monthly rate is the APR divided by 12, applied to the balance at the start of each month and rounded to the cent. The Consumer Financial Protection Bureau notes that many issuers calculate interest daily on the average daily balance, so a real statement will differ by cents. The examples assume no new purchases, no fees and no change in the rate.
22.15% ÷ 12 = 1.8458% a month. $5,000 × 0.018458 = $92.29. Held for twelve months without paying it down, that is $1,107.48 of interest.
Assumption: each month's minimum is 1% of the balance plus that month's interest, with a $20 floor (the floor is taken from the CFPB's sample calculation; the 1%-plus-interest formula is a common issuer design, not a figure from the Fed). The first payment is $50.00 + $92.29 = $142.29. Because the principal falls by exactly 1% a month, the balance shrinks slowly, and so does the payment. The $20 floor takes over in month 197, when $697.38 is left. The last payment falls in month 253. Total paid: $13,372.78, of which $8,372.78 is interest.
The CFPB's worked example in Appendix M2 to Regulation Z uses a minimum of “2 percent of the outstanding balance or $20, whichever is greater”, applied to rates of 17% and 21%. At 22.15% that formula leaves very little for principal. The first payment is $100.00, of which $92.29 is interest and $7.71 reduces the balance. Run forward, the balance clears in month 1,184, or 98.7 years, with $49,693.94 of interest.
With a level payment, the standard amortisation formula gives $5,000 × r ÷ (1 − (1 + r)−36), where r = 0.2215 ÷ 12. The payment is $191.34 a month. Total paid $6,888.26, of which $1,888.26 is interest.
| Payment rule | First payment | Months to clear | Total interest |
|---|---|---|---|
| 1% of balance + interest ($20 floor) | $142.29 | 253 | $8,372.78 |
| 2% of balance or $20 | $100.00 | 1,184 | $49,693.94 |
| Fixed payment for 36 months | $191.34 | 36 | $1,888.26 |
The gap between the first two rows is the lesson. A rule that includes the month's interest always cuts principal by its percentage. A rule that is only a percentage of the balance cuts it by what is left after interest: at 22.15%, 0.15% of the balance a month.
Under section 1026.7(b)(12) of Regulation Z, a card statement must carry the words “Minimum Payment Warning: If you make only the minimum payment each period, you will pay more in interest and it will take you longer to pay off your balance”, with an estimate of the payoff time and total cost. Appendix M1 requires the issuer to use “the minimum payment formula(s) that apply to a cardholder's account” and the APRs that apply to it, and to show the monthly payment that would clear the balance in 36 months.
Where the Fed comes in
The Federal Open Market Committee raised the target range for the federal funds rate to 3.75%–4.00% on September 16, 2026, by a vote of 12–0.
In the Board's H.15 data, the bank prime loan rate was 6.75% on every business day from September 1 to September 16, 2026, and 7.00% from September 17. The H.15 release of October 2, 2026 shows 7.00% for each day from September 25 to October 1, alongside an effective federal funds rate of 3.88%. The Board describes the series as the rate “posted by a majority of top 25” insured US-chartered commercial banks.
The Fed's own explainer says the prime rate is set by individual banks, not by the Federal Reserve, and is used as a reference for loans including credit cards. The CFPB's December 2025 report to Congress on the card market states that “almost all general purpose account interest rates are tied to a variable rate index”, and that “the prime rate is typically set at 3 percent plus the target level of federal funds rate”. The CFPB lists a rise in the index a variable rate is tied to, such as the US prime rate, among the circumstances in which a card company can raise the rate on an existing balance.
Since September 17, 2026, 7.00% − 4.00% = 3.00 points, matching the convention the CFPB describes. A quarter-point move in prime, carried through to an APR priced at prime plus a fixed margin, adds $5,000 × 0.25% ÷ 12 = $1.04 a month to the interest on a $5,000 balance.
The 22.15% average describes the second quarter of 2026, before the September 16 decision. As an illustration only, an account at 22.15% that moved by the full 0.25 point would be at 22.40%. On the 1%-plus-interest rule the payoff is still 253 months, but total interest rises to $8,472.12, or $99.34 more. On the 2%-or-$20 rule it stretches to 1,353 months.
The CFPB attributes most of the rise in card APRs between March 2022 and September 2023 to a 5.1-point increase in prime over that period. It also reports that the average APR margin, the part of the rate above the index, “reached a new high in 2024 at 16.4 percent”. On those figures, a quarter-point change in prime is small next to the margin each issuer chooses, which is fixed in the card agreement and does not follow the Fed.
What it means for your money
Interest is charged on the balance that is carried; the CFPB notes that grace periods typically apply only to new purchases and only when no balance was carried. For a balance that stays, the cost is set mostly by the card's margin and partly by prime, which moves with the Fed's target range.
- The first payment is mostly interest. On $5,000 at 22.15%, $92.29 of a $142.29 minimum is interest; $50.00 reduces the debt.
- The formula matters as much as the rate. At the same APR, the two minimum rules in the table differ by 931 months.
- A Fed move is small in dollars per month. A quarter point is $1.04 a month on $5,000; over 253 months on a shrinking balance it came to $99.34 in the illustration above.
- Your own statement has your numbers. The Regulation Z box uses your issuer's formula and your APRs, which this article cannot know.
For how the Fed reached its September decision, see the September rate decision. For the interest side of the household ledger, see how interest rates work, how the Fed works and the piece on inflation and your savings. The release calendar lists upcoming data.
Sources
- Consumer Credit - G.19, September 8, 2026 (July 2026 data; Terms of Credit table)Federal Reserve Board · Oct 4, 2026 · Primary source
- Consumer Credit - G.19: AboutFederal Reserve Board · Oct 4, 2026 · Primary source
- H.15 Selected Interest Rates (Daily), October 2, 2026Federal Reserve Board · Oct 4, 2026 · Primary source
- H.15 Data Download: Average majority prime rate charged by banks (RIFSPBLP_N.D), last 50 observationsFederal Reserve Board · Oct 4, 2026 · Primary source
- What is the prime rate, and does the Federal Reserve set the prime rate?Federal Reserve Board · Oct 4, 2026 · Primary source
- FOMC statement, September 16, 2026Federal Reserve Board · Sep 16, 2026 · Primary source
- Regulation Z, 12 CFR 1026.7 Periodic statementConsumer Financial Protection Bureau · Oct 4, 2026 · Primary source
- Regulation Z, Appendix M1 to Part 1026: Repayment DisclosuresConsumer Financial Protection Bureau · Oct 4, 2026 · Primary source
- Regulation Z, Appendix M2 to Part 1026: Sample Calculations of Repayment DisclosuresConsumer Financial Protection Bureau · Oct 4, 2026 · Primary source
- How does my credit card company calculate the amount of interest I owe?Consumer Financial Protection Bureau · Oct 4, 2026 · Primary source
- When can my credit card company increase my interest rate?Consumer Financial Protection Bureau · Oct 4, 2026 · Primary source
- The Consumer Credit Card Market: Report to Congress (December 2025)Consumer Financial Protection Bureau · Oct 4, 2026 · Primary source
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