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Deep subprime borrowers incur $1,599 more interest on the average credit card balance than super-prime borrowers

Here's a breakdown of the average interest rate for borrowers from deep subprime to super-prime, and how much interest each can incur on credit card debt.

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Editor's Note: APYs listed in this article are up-to-date as of the time of publication. They may fluctuate (up or down) as the Fed rate changes. CNBC will update as changes are made public.

Credit scores provide lenders with a snapshot of your financial history, helping them determine the likelihood you are to repay loans. The risk level you fall into influences the interest rates you receive on financial products, from credit cards to mortgages.

The greater risk you pose, the higher interest rate you receive, which can make for substantial interest charges over the life of a loan. Deep subprime borrowers, considered the most risky, can incur interest charges that are more than double the amount of super-prime borrowers when assuming the average credit card balance of $6,194 and $200 monthly payments.

Below, we break down the average interest rate for each credit risk category and take a look at how much interest you can incur on credit card debt.

Credit score risk categories

The CFPB Consumer Credit Panel categorizes the five different types of borrowers by credit score.

  • Deep subprime: Credit scores below 580
  • Subprime: Credit scores of 580 to 619
  • Near-prime: Credit scores of 620 to 659
  • Prime: Credit scores of 660 to 719
  • Super-prime: Credit scores of 720 or above

Keep in mind that these categorizations can vary by organization. A 650 credit score is considered near-prime by the CFPB, but the credit bureau Experian classifies 650 as subprime.

Average interest rate by borrower risk profile

Lenders assign interest rates based on your credit score and risk profile as well as other factors, including income and monthly housing payments. The CFPB's Consumer Credit Card Market Report tracked effective interest rates for revolving credit card accounts, which were calculated as the total amount of all interest charges paid in a year divided by the total end-of-cycle balance.

Here are the effective interest rates each type of borrower received in 2018:

  • Deep subprime: 21.50%
  • Subprime: 20.40%
  • Near-prime: 19.10%
  • Prime: 16.80%
  • Super-prime: 12.50%
  • Average: 15.60%

Deep subprime borrowers receive credit card interest rates that are 9% higher than super-prime borrowers. The difference in rates can lead to high interest charges when subprime borrowers carry a balance on their credit card, which we explain more below.

Average interest charges by borrower risk profile

Since the average interest rate is higher for deep subprime and subprime borrowers, they incur greater interest charges compared to borrowers with near-prime, prime and super-prime credit.

To show the impact of a high interest rate, we used the average interest rates by borrower risk profile to calculate the estimated interest charges each type of borrower can incur. We assumed borrowers make $200 monthly payments on the average $6,194 credit card balance, according to Experian.

Here's how much money each type of borrower would pay in interest alone, and how long it'd take to pay off debt:

  • Deep subprime: $2,922 over 46 months
  • Subprime: $2,676 over 45 months
  • Near-prime: $2,407 over 44 months
  • Prime: $1,983 over 41 months
  • Super-prime: $1,323 over 38 months
  • Average: $1,783 over 40 months

While the average amount of time to repay debt isn't that different — 38 to 46 months — borrowers can experience a substantial difference in the cost of carrying a $6,194 balance month to month.

Deep subprime borrowers can incur interest charges that are more than double ($1,599 more) the amount of super-prime borrowers. Those additional charges could be better spent on household expenses, such as groceries, gas and utilities, or on savings.

Bottom line

Credit card interest charges can add up over time, regardless if you're classified as a low-risk or high-risk borrower. In order to avoid interest charges altogether, pay your statement balance off in full every billing cycle.

With that said, not everyone can afford to pay off their balance in full. As a result, you may wind up carrying hundreds or thousands of dollars every month, resulting in steep interest charges — especially if you're a deep subprime or subprime borrower.

In order to pay off debt, you may want to consider using a balance transfer card, asking a family member or close friend for a loan or taking out a personal loan. The latter two options may be a better fit if you have less-than-stellar credit since balance transfer cards are often reserved for borrowers with good or excellent credit. After all, borrowing money from family and friends doesn't require a credit check, and personal loans often have more lenient credit requirements.

Once you pay off debt, consider putting any extra money into a high-yield savings account to earn competitive interest. For instance, depositing $1,000 into the Marcus by Goldman Sachs High Yield Online Savings account, which earns 1.05% APY, could earn you $10 in interest after a year. That's nearly 18 times the national average of 0.06%.

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Information about the Marcus by Goldman Sachs High Yield Online Savings has been collected independently by CNBC and has not been reviewed or provided by the bank prior to publication. Goldman Sachs Bank USA is a Member FDIC.

Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the CNBC Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.