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Rate survey: Average card APR jumps to record high of 15.82 percent

By  |  Published: May 31, 2017

Kelly Dilworth
Personal Finance Writer
Specializing in new trends in credit

 

The national average APR for new card offers broke another record this week, rising to an all-time high of 15.82 percent, according to the CreditCards.com Weekly Credit Card Rate Report.

This is the highest average APR CreditCards.com has recorded since it began tracking rates in mid-2007.

Bank of America helped kick off this week’s rate change with a 1-point rate increase on two of its basic, lower-rate cards. The BankAmericard and the BankAmericard for Students now charge a minimum APR of 12.74 percent and a maximum APR of 22.74 percent.

Bank of America also modified the cards’ promotional terms. For example, it clipped the balance transfer periods on the two BankAmericards from 18 months to 15 months and added a 15-month interest-free promotion on purchases.

Walmart also increased the APR on the Walmart Mastercard by a quarter of a percent this week, causing its minimum APR to rise to 17.65 percent. In addition, CreditCards.com swapped out two cards that are no longer promoted online with rewards cards that charge somewhat higher APRs. 

Credit cards overtake debit cards as the most popular way to pay with plastic
Debit cards are still one of the most popular ways to pay with plastic. But according to a new report from Nilson, credit cards are quickly closing in and beating debit cards in overall popularity.

As card issuers sweeten rewards programs – many of which offer substantial amounts of cash back in exchange for everyday purchases, such as gas and groceries – consumers are increasingly turning to credit to pay for everyday expenses.

According to a Nilson report released this month, more than half of all purchases in 2016 that used some type of plastic payment card – 53.64 percent – were made on a credit card. In 2015, by contrast, just 45.84 percent of card purchases used credit.

The percentage of cardholders using credit instead of a debit card or prepaid card has increased every year since 2012, thanks in part to consumers’ increasing preference for using rewards cards.

“Consumers are choosing credit cards over debit cards to gain rewards from banks and other issuers,” said Nilson’s David Robertson in a news release.

Debit cards used to regularly offer rewards programs that competed with credit card rewards. But since federal rules enacted in 2011 limit debit card swipe fees, debit card reward programs have become increasingly scarce.

Rewards-based credit cards, meanwhile, have surged in popularity. According to research released this month by the financial services firm Credit Suisse, 72 percent of the offers issuers mailed to consumer homes advertised some kind of rewards offer.

As consumers use credit cards more heavily, they’ve also become more likely to carry a balance. According to research released in April by the American Bankers Association, the percentage of cardholders who revolve their balances from month-to-month rose by nearly half a percentage point in late 2016 to 43.7 percent of all bank-issued accounts. Meanwhile, the percentage of cardholders who pay off every balance dropped to 29.1 percent of all accounts.

CreditCards.com's Weekly Rate Report
  Avg. APR Last week 6 months ago
National average 15.82% 15.77%
15.18%
Low interest 12.73%
12.62% 12.00%
Cash back 15.99%
15.84%
15.33%
Balance transfer 15.13%
15.07%
14.41%
Business 13.66%
13.66%
13.12%
Student 14.04%
13.92%
13.42%
Airline 15.77%
15.77%
15.13%
Reward  15.85%
15.81%
15.24%
Instant approval 18.30%
18.30%
17.86%
Bad credit 23.23%
23.23%
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: May 31, 2017

See related: N.Y. Fed: Household debt passes pre-recession peak, Credit card issuer complaints rose 20 percent in 2016

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Updated: 08-20-2017

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