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Although previous literature provides some insights into the pricing patterns of credit cards, further research, which explores the influence of search incentives across short-and long-term risk classes of consumers on the equilibrium level of APRs, is merited. Furthermore, previous studies have failed to take into consideration that both supply and demand sides of the credit card market affectAPRs charged to consumers. We address this shortcoming by including simultaneously both sides of the credit card market as key determinates of APRs and employ instrumental variables (IV) estimation techniques (2SLSs and two-step GMM) to deal with any potential bias arising from reverse causality (endogeneity) between price and risk.