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Rate survey: Average card APR climbs to record high of 15.51 percent

By  |  Published: March 8, 2017

Kelly Dilworth
Personal Finance Writer
Specializing in new trends in credit

The national average APR on new card offers inched up this week, rising to an all-time high, according to the CreditCards.com Weekly Credit Card Rate Report.

For the first time on record, the national average APR rose to 15.51 percent -- up from 15.50 percent the previous week. Before this year, the highest average CreditCards.com had recorded was 15.29 percent.

SunTrust Bank helped spur this week’s rate change by increasing the lowest available APR on one of its travel cards by a full percentage point. Cardholders who apply for the SunTrust Travel Rewards card are now offered a minimum APR of 11.74 percent. The card’s maximum rate of 21.74 percent stayed the same.

Wal-Mart was also active. It boosted the APR on the Walmart Mastercard by 0.25 percent. Cardholders are now offered a range of 17.40 percent to 23.40 percent.

Rates expected to rise again
Average rates on new card offers started breaking records earlier this year after the Federal Reserve increased its benchmark interest rate, the federal funds rate, in mid-December. After the Federal Reserve’s rate increase, most new and current variable rate card accounts also increased by a quarter of a percent.

As a result, the national average APR climbed to record highs as a growing number of card issuers matched the Federal Reserve’s rate hikes. This year marks the first time since CreditCards.com began tracking rates in mid-2007 that the national average APR has come within rounding distance of 16 percent. In 2008, the average APR for the year was just 11.54 percent.

Interest rates will likely rise again later in March if, as expected, the Federal Reserve announces another rate increase. Federal Reserve chairwoman Janet Yellen signaled earlier this month that the Federal Reserve is likely to increase rates at its meeting, held March 14-15.

“Our individual projections for the appropriate path for the federal funds rate reflect economic forecasts that generally envision that economic activity will expand at a moderate pace in coming years, labor market conditions will strengthen somewhat further and inflation will be at or near 2 percent over the medium term,” Yellen said in a March 3 speech.

“In short, we currently judge that it will be appropriate to gradually increase the federal funds rate if the economic data continue to come in about as we expect.”

If the Federal Reserve increases rates by another quarter of a percent, that could have a substantial effect on credit card balances.

Since 2015, the Federal Reserve has increased the federal funds rate just twice, causing individual card rates to rise by a total of .50 percent. However, it’s expected to increase rates multiple times over this year. That could mean cardholders will see their individual card APRs rise by another half a percentage point or more before the end of 2017.

As card debt gets more expensive, consumers cut balances
As credit card rates continue to rise, consumers are trimming their balances.

The Federal Reserve also announced March 7 that revolving debt -- which is mostly made up of credit card debt -- fell by an annualized rate of 4.6 percent in January after increasing by 4.3 percent the previous month.

January marked the first time credit card debt had fallen in nearly a year. For most of 2016, consumers steadily packed on more debt. In November, for example, consumer credit card balances expanded by nearly 16 percent. 

CreditCards.com's Weekly Rate Report
  Avg. APR Last week 6 months ago
National average 15.51% 15.50%
15.22%
Low interest 12.36%
12.36% 11.98%
Cash back 15.61%
15.61%
15.32%
Balance transfer 14.77%
14.76%
14.39%
Business 13.41%
13.41%
13.12%
Student 13.67%
13.67%
13.42%
Airline 15.44%
15.40%
15.13%
Reward  15.59%
15.57%
15.30%
Instant approval 18.09%
18.09%
18.04%
Bad credit 23.01%
23.01%
22.86%
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: March 8, 2017

See related: Why APR keeps rising on closed card with a balance, Overdue card debt sinks to a decade low





CreditCards.com's Weekly Rate Report
  Avg. APR Last week 6 months ago
National average 15.51% 15.50% 15.22%
Low interest 12.36% 12.36% 11.98%
Cash back 15.61% 15.61% 15.32%
Balance transfer 14.77% 14.76% 14.39%
Business 13.41% 13.41% 13.12%
Student 13.67% 13.67% 13.42%
Airline 15.44% 15.40% 15.13%
Reward  15.59% 15.57% 15.30%
Instant approval 18.09% 18.09% 18.04%
Bad credit 23.01% 23.01% 22.86%
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: March 8, 2017

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Updated: 08-20-2017

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