While most personal loan interest rates are fixed, federal rate changes and inflation do impact interest rates for new loan borrowers, although indirectly.
As the cost of living rises and more Americans take on personal loan debt, it is important for consumers to understand how inflation and federal rate changes can affect their loans. Understanding current interest rate statistics and personal loan information can help you better plan for your own borrowing needs and get the best out of your loan.
Bankrate’s take:
Before borrowing money, use a personal loan calculator to see what rates and terms work best for your budget.
Personal loan and interest rate statistics
- The average personal loan interest rate is 12.37 percent.
- Bankrate’s lenders have interest rates ranging from 6.49 percent to 35.99 percent.
- The average personal loan debt per borrower in the U.S. in July 2025 was $11,704
- U.S. inflation is currently sitting at 2.7 percent month over month.
- The Federal Reserve has kept the federal funds rate the same throughout 2025 so far.
- The current federal funds target rate is 4.25% to 4.50%, though personal loan rates are much higher.
- Credit score, loan amount and lender may influence the interest rate. Prequalifying for a personal loan will give you the best idea of your individual rate.
Impact of the Fed on loans
Interest rates for personal loans, mortgages, auto loans and other financing products are determined, in part, by decisions from the Federal Reserve (the Fed) to raise or lower the federal funds rate.
When the funds rate goes up, interest rates tend to rise, making it cost more to borrow money. You’ll pay more each month, and you’ll pay more in total interest over the life of the loan.
Personal loan interest rates over time
You can often tell when something major has happened in the country by the way rates react. Typically, something that jolts the economy — like a recession or global event — prompts the Fed to drop the federal funds rate to help it recover. Over time, rates may increase or plateau as the economy gets better.
Just look at the last 20 years: As the country recovered from the Great Recession, the Fed dropped rates to help stimulate the economy, causing the average personal loan rate to drop. Rates fell again during the pandemic, but have rebounded and grown since.
Personal loan interest rates and credit score
Credit score can impact the interest rate you get on a personal loan. Since credit scores help show how someone handles their debt, lenders use them to determine the risk of lending money to a borrower. The higher your credit score, the better your rate may be.
Bankrate’s take:
A lower loan amount or shorter repayment term poses less risk to a lender. The less you borrow and the quicker you can pay it back, the lower your rate could be.
Personal loan interest rate statistics by lender
The interest rate you qualify for depends on your credit score and financial background, but it also depends on the type of lender you choose.
Banks tend to have the highest interest rates and strictest eligibility requirements because these institutions are so highly regulated. Average credit union rates are typically lower since they require membership to apply for loan products. However, online lenders typically have the lowest rates of all, as well as the most lenient eligibility requirements. However, they also have some of the highest maximum APRs.
- Average personal loan rate among all lenders: 12.37 percent.
- Average personal loan rate at credit unions: 10.74 percent.
- Average personal loan rate at commercial banks: 12.02 percent.
- Personal loan rates at online lenders: 6.49 percent to 35.99 percent.
According to the TransUnion industry snapshot for July 2025, online lenders are the most popular option, with 50.4 percent of borrowers using fintech lenders, 21.6 percent using banks and 19.1 percent using credit unions.
Variable vs. fixed rate loans
Fixed rates are generally preferred because they are more predictable. That’s why debt consolidation loans can help you better manage high, variable-rate credit card debt.
Average personal loan balances
According to TransUnion’s industry snapshot, the average personal loan balance per consumer is $11,704. The average new personal loan account balance is $6,356.
- The average personal loan balance per bank consumer is $12,788.
- The average personal loan balance per credit union consumer is $8,397.
- The average personal loan balance per fintech consumer is $13,422.
Average new personal loan balances by state
Some of the highest new balances are located on the East Coast, where the cost of living is typically higher than many other parts of the United States.
Personal loan interest rates and your money
It’s important to understand interest rates because they influence how much you’ll pay each month and how much you’ll pay in interest over the life of the loan. That’s how much you pay over the amount you originally borrowed.
For example, using the average personal loan balance in the U.S., $11,704, and a repayment term of five years, you can see that a higher interest rate can cost thousands of dollars.
| Loan amount | Loan term | Interest rate | Monthly payment | Total interest paid |
| $11,704 | 5 | 7 percent | $232 | $2,201 |
| $11,704 | 5 | 10 percent | $249 | $3,217 |
| $11,704 | 5 | 15 percent | $278 | $5,002 |
| $11,704 | 5 | 20 percent | $310 | $6,901 |
Bottom line
The interest rate on a personal loan impacts how much you’ll pay each month and over the life of the loan. Understanding what affects the interest rate you’ll get on your loan will help you know what to expect when you start shopping for personal loans. Getting the lowest interest rate possible can help save you thousands of dollars in the long run.
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