USA   |   UK   |   Australia   |   Canada
ADVERTISEMENT

Credit card interest rates drop to 14.87 percent

By

CreditCards.com's Weekly Rate Report
  Avg. APR Last week 6 months ago
National average 14.87% 14.89%
15.06%
Low interest 11.53%
11.53% 10.37%
Cash back 15.26%
15.11%
14.94%
Balance transfer 14.00%
14.02%
12.73%
Business 12.85%
12.85%
12.80%
Student 13.14%
13.14%
13.27%
Airline 15.15%
15.15%
15.46%
Reward  14.99%
14.99%
15.04%
Instant approval 17.93%
17.93%
28.00%
Bad credit 22.48%
22.73%
22.73%
Methodology: The national average credit card APR is comprised of 100 of the most popular credit cards in the country, including cards from dozens of leading U.S. issuers and representing every card category listed above. (Introductory, or teaser, rates are not included in the calculation.)
Source: CreditCards.com
Updated: Feb. 25, 2015

Average rates on new card offers fell Wednesday for the first time in nearly two months, according to the CreditCards.com Weekly Credit Card Rate Report.

The national average annual percentage rate (APR) slid to 14.87 percent after U.S. Bank lowered the APR on its Secured Visa card from 20.99 percent to 18.99 percent. The rate change caused the average APR for subprime cards to fall to 22.48 percent -- a more than four-year low.

Most issuers have left card rates alone since 2014. However, according to spokeswoman Elizabeth Crosta, American Express recently notified "a small percentage" of its 37 million U.S. cardholders that it's raising rates on existing card accounts by an average of 2.5 percentage points.

"We looked at all of our rates and found that some card members had rates that are significantly lower than market rates," says Crosta. For example, some cardholders were being charged interest rates as low as 3.25 percent. The average APR for low interest cards, by contrast, is currently 11.53 percent.

After reviewing cardholder accounts for several months, American Express began sending out notices in early February to cardholders who were paying below market rates.

"We made this change to better align APRs with average APRs offered for similar cards in the marketplace," said Crosta in an email. The changes are also intended to make the rates charged to existing American Express customers more comparable with the rates offered to new customers, she says.

For example, the lowest available rate on a new American Express card is currently 12.99 percent. "If you were to apply today, that would be the lowest rate you would get," says Crosta.

So, existing cardholders charged an APR below 12.99 percent may receive a notice informing them their APR is being increased by a few percentage points so that it's closer to the minimum APR offered to new cardholders. For example, a cardholder paying an APR of 8.99 percent might be reassigned an APR of around 11.49 percent instead.   

"For these card members, the new APR is no higher than if they applied for a comparable American Express card today," added Crosta in an email.

Standard APRs aren't the only credit card terms being changed, according to notices reviewed by CreditCards.com. Some American Express cardholders are also receiving notices about changes to penalty APRs, which are applied when a customer misses a payment.

For example, one cardholder in Columbus, Ohio, was notified earlier this month that the penalty APR on his American Express Blue card was being increased from 27.24 percent to 29.24 percent. His standard purchase APR of 15.24 percent was left unchanged. In the disclosure, dated Feb. 11, American Express told the customer his current penalty APR was "lower than typical penalty APRs for similar cards in the marketplace" and so it was being increased to make it more comparable.

According to Crosta, "it has been some time" since American Express raised interest rates for a significant number of existing cardholders, but the card issuer has been thinking about changing cardholders' rates since 2014. "Over time, there are changes in the industry, changes to credit profiles and over time, we look at those factors," she says. This is a common practice for card issuers, she adds. "We do look at rates all the time."  

What to do if you receive a rate increase
If you receive notification of a rate increase on an existing credit card, don't panic. You have some time to sort out your finances and decide whether it's worth keeping the card.

Under the Credit CARD Act of 2009, card issuers must give you at least 45 days' advance notice of a rate increase and they must also give you the same amount of time to decide whether to accept the hike. If you decide to opt out and close your account, you will be charged your current rate until you repay your balance in full.

Be careful about new purchases, however. The lower rate only applies to your existing balance prior to the rate increase. If you decide to use the card after you receive notice of a rate hike, you may have just a few weeks left before the new card APR is applied to new purchases.

See related: 2015 Balance Transfer Survey: Offers more generous, but move fast

Published: February 25, 2015



Join the discussion

We encourage an active and insightful conversation among our users. Please help us keep our community civil and respectful. For your safety, do not disclose confidential or personal information such as bank account numbers or social security numbers. Anything you post may be disclosed, published, transmitted or reused.

If you are commenting using a Facebook account, your profile information may be displayed with your comment depending on your privacy settings. By leaving the 'Post to Facebook' box selected, your comment will be published to your Facebook profile in addition to the space below.

The editorial content on CreditCards.com is not sponsored by any bank or credit card issuer. The journalists in the editorial department are separate from the company's business operations. The comments posted below are not provided, reviewed or approved by any company mentioned in our editorial content. Additionally, any companies mentioned in the content do not assume responsibility to ensure that all posts and/or questions are answered.


Share This Story




Follow Us!


Credit Card Rate Report

Updated: 03-02-2015

National Average 14.87%
Low Interest 11.53%
Business 12.85%
Student 13.14%
Balance Transfer 14.00%
Reward 14.99%
Airline 15.15%
Cash Back 15.26%
Instant Approval 17.93%
Bad Credit 22.48%

ADVERTISEMENT
ADVERTISEMENT