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Rate survey: Credit card interest rates rise to 14.94 percent

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CreditCards.com's Weekly Rate Report
  Avg. APR Last week 6 months ago
National average 14.94%
14.93%
15.01%
Low interest 10.29%
10.29% 10.40%
Balance transfer 12.62%
12.59%
12.62%
Business 12.98%
12.98%
13.13%
Student
13.16%
13.16%
13.31%
Cash back  14.17%
14.13%
14.47%
Airline  14.63%
14.63%
14.63%
Reward 14.73% 14.72%
14.85%
Instant approval 15.49%
15.49%
15.49%
Bad credit 23.64%
23.64%
23.64%
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: May 8, 2013

Interest rates on new credit card offers ticked up this week, according to the CreditCards.com Weekly Credit Card Rate Report. 

The national average annual percentage rate (APR) rose to 14.94 percent Wednesday. This is the first time in three months that the national average has increased.

Chase prompted this week's rate change by increasing the APR on the Chase Freedom card by one percentage point.

The cash-back card previously featured an APR range of 12.99 percent to 22.99 percent. Now, cardholders may be offered an APR from 13.99 percent or as high as 22.99 percent.

The higher rate on the Chase Freedom card caused other rate categories to rise as well. For example, the average APR for cash-back credit cards is now 14.17 percent, up from 14.13 percent. The average APR for balance transfer cards also rose from 12.59 percent to 12.62 percent.

Rewards cards pushing rates higher
Despite occasional fluctuations, credit card interest rates have remained exceptionally stable for more than two years now. For example, the national average has remained above 14.9 percent for the past 26 months and hasn't moved past 15.1 percent since January 2012.

Issuers have made so few changes to card offers, in fact, that the national average has remained within rounding distance of 15 percent since late 2010.

According to CreditCards.com data, rewards credit cards, such as the Chase Freedom card, are partially to blame for that relatively high average rate. 

That's because most credit cards these days are now rewards cards. Among the 100 cards in the CreditCards.com database, for example, approximately two-thirds of the cards offer cardholders some kind of credit card reward, such as cash-back or rewards points, in return for making purchases.

That trend has led to higher interest rates for many cardholders, including those with pristine credit. In order to help pay for the extra perks, issuers tend to charge cardholders significantly higher rates on rewards credit cards than on plain vanilla credit cards. 

For example, the average APR for rewards credit cards, which is currently 14.73 percent, is nearly 2 points higher than the average APR for balance transfer cards.

The difference in rates is even more pronounced for basic, low-interest credit cards. The average APR for low-interest cards is currently 10.29 percent. Compare that to the average APR for rewards cards, which is nearly four percentage points higher. 

Cardholders' financial health improving
Despite higher APRs in recent years, a record number of credit card holders have managed to keep up with their payments -- especially in the past year. 

Late payments by 60 days or more, for example, have tumbled in the past 12 months, falling by 28 percent, according to new research from Fitch Ratings.

Credit card charge-offs -- which measure the number of accounts that credit card issuers have written off as uncollectible -- are also at historic lows, falling 23 percent since this time last year.

The number of accounts that are still in positive standing is a good measure of how far consumers have come since the recession.

For example, credit card charge-offs are down by 65 percent since 2009, according to Fitch, showing that even late payers are doing well enough financially to at least send a payment when they can.

Credit card holders are also remaining disciplined about how much debt they take on, making it easier for them to pay their bills on time.

For example, credit card debt fell by $1.7 billion in March, according to research released Tuesday by the Federal Reserve.  

The Fed's latest report on household debt and credit marked the first time this year that cardholders have pulled back on the amount of credit card debt they take on.

However, despite occasional months of freer-than-usual spending, cardholders have been slow to add more than a moderate amount of debt to their balances through most of the past year.

See related: More consumers ditch rewards, go with plain vanilla credit cards

Published: May 8, 2013


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Credit Card Rate Report

Updated: 09-02-2014

National Average 15.06%
Low Interest 10.37%
Balance Transfer 12.73%
Business 12.80%
Student 13.27%
Cash Back 14.94%
Reward 15.04%
Airline 15.46%
Bad Credit 22.73%
Instant Approval 28.00%

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