Although low introductory or “teaser” interest rates of 1 to 5 percent can make
the interest costs of carrying a balance on a credit card credit negligible, Table 6
indicates that most habitual credit card revolvers pay relatively high rates of interest.
For the typical household who sometimes paid off the balance in full, the
median interest rate charged ranged from 13 to 14.8 percent, depending on the survey
year. For households that usually revolve debt, the typical interest rate was 15 to 16
percent, implying an annual interest rate cost of about $400, if the balance during the
survey month and new charges recorded are representative of the normal monthly
balance and charges. In 2001, less than 4 percent of frequent revolvers had interest
rates of 5 percent or less on the bank-type card with the largest balance; almost 19
percent faced interest rates above 20 percent.