ADVERTISEMENT

Rate survey: Average card APR climbs to all-time high of 15.96 percent

By  |  Published: June 21, 2017

Kelly Dilworth
Personal Finance Writer
Specializing in new trends in credit

 

The national average APR for new credit card offers jumped to a new record high this week after multiple card issuers increased rates, according to the CreditCards.com Weekly Credit Card Rate Report.

The rate jumped to 15.96 percent – the highest average card APR CreditCards.com has recorded since it began tracking rates in mid-2007. The average was 15.89 percent last week, and 15.36 percent at the start of 2017.

This week’s rate increase was largely due to the Federal Reserve’s latest bump in the federal funds rate. On June 14, the Federal Reserve announced it would boost its benchmark interest rate by another quarter of a percent. Multiple lenders responded by hiking credit card APRs by the same amount.

This is the second time this year the Federal Reserve has raised its benchmark interest rate. Average APRs are expected to rise again over the next month as more cards match the Fed’s higher rate.

Weaker demand for new credit cards
As card APRs rise, demand for new credit cards has slipped. According to the Federal Reserve’s April 2017 Senior Loan Officer survey, for example, a number of banks reported receiving fewer card applications and credit inquiries in the first quarter of 2017.

Six major banks reported “weaker demand” for new cards. Only three major banks experienced the opposite and said demand for new cards had picked up.

A separate report from TransUnion, released in May, found the total number of consumers who own a credit card has surged in recent months. The credit bureau reported more than 171 million consumers own at least one bank-issued credit card – up from just over 160 million in 2015. “The number of consumers with access to a credit card at the end of Q1 2017 reached the highest level since 2005,” the credit agency said in a news release.

However, many of the consumers opening new cards are subprime cardholders who previously had a hard time qualifying for credit in the first several years after the Great Recession. For example, the number of subprime consumers who owned a card in the first quarter of 2017 grew by nearly 9 percent, according to TransUnion. The number of new cardholders with average to excellent credit, by contrast, grew by just 2.6 percent. 

Banks have been much more open in recent months to accepting cardholders with lower scores. According to the Federal Reserve’s Senior Loan Officer survey, for example, a significant number of banks reporting easing credit application standards for new cards.

However, banks are still relatively cautious about approving large credit lines. For example, three major banks increased credit limits in the first quarter of 2017, while an equal number clipped them. The TransUnion survey also found that banks are offering credit limits that are roughly $1,000 less, on average, than banks offered to cardholders with lower scores seven years ago.  

But despite the cautious approach toward subprime cardholders, banks are still experiencing an uptick in missed payments that may be due, in part, to increased numbers of subprime cardholders.

Missed credit card payments continue to climb
According to a report released June 20 by the credit agencies Experian and S&P, late payments on bank-issued credit cards rose for the seventh consecutive month in May, climbing to a four-year-high. 

Experian says that higher interest rates on credit cards may share part of the blame for why missed payments on card APRs are rising, while late payments on other types of loans, such as mortgages and auto loans, are still much more rare. “One factor in the difference between rising bank card defaults and stable defaults on mortgages and autos may be the difference in interest rates: about 4 percent on mortgages and 4.4 percent on auto loans, compared to 12 percent to 18 percent on bank card loans,” said S&P’s David M. Blitzer in a news release

CreditCards.com's Weekly Rate Report
  Avg. APR Last week 6 months ago
National average 15.96% 15.89%
15.27%
Low interest 12.80%
12.73% 12.09%
Cash back 16.12%
16.09%
15.41%
Balance transfer 15.19%
15.13%
14.51%
Business 13.74%
13.66%
13.24%
Student 14.98%
14.89%
13.51%
Airline 15.88%
15.77%
15.22%
Reward  16.02%
15.95%
15.33%
Instant approval 18.32%
18.32%
17.88%
Bad credit 23.29%
23.23%
22.92%
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: June 21, 2017

See related: Credit bureaus tighten reporting rules: Who wins, who loses?, CFPB: Many low-income consumers start credit on a bad note

ADVERTISEMENT
ADVERTISEMENT

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.




Updated: 08-20-2017

ADVERTISEMENT


Weekly newsletter
Get the latest news, advice, articles and tips delivered to your inbox. It's FREE.


ADVERTISEMENT