ADVERTISEMENT

Credit card interest rates see 2nd straight increase

Discover tweaks More card APR, sending national average slightly higher

By

For the second straight week, it got more expensive to get a new credit card, though only slightly. 

CreditCards.com's Weekly Rate Report
  Avg. APR Last week 6 months ago
National average 14.35%
14.34%
14.44%
Low interest 12.06%
11.99% 12.24%
Cash back  12.55%
12.49%
12.53%
Balance transfer 12.81%
12.81%
12.77%
Business 12.85%
12.85%
13.06%
Airline 14.37%
14.37%
14.43%
Reward  14.40%
14.38%
14.44%
Student
14.49%
14.49%
14.10%
Instant approval 16.49%
15.99%
18.41%
Bad credit 21.04%
21.04%
20.24%
Methodology: The national average credit card APR is comprised of about 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: 10-6-2010

Spurred by an APR change from Discover, the national average annual percentage rate (APR) on new credit card offers climbed to 14.35 percent, according to the CreditCards.com Weekly Credit Card Rate Report. That's up just a tick from the previous week, after a large jump the week before.

Discover raised the lower end of the APR range on its More card from 11.99 to 12.99 percent, but left the top end unchanged at 19.99 percent. That was the only APR change witnessed this week, but it was enough to push the national average slightly higher. The back-to-back increases were the first since late June.

Discover declined to comment about the move. However, it's common for issuers to tweak their terms and conditions -- APRs, annual fees, introductory rates, etc. -- from time to time for any number of reasons. 

Though rate hikes haven't been as common in recent weeks, the overall trend for credit card interest rates is still upward for the year. A typical cardholder who borrowed $5,000 on a credit card today and consistently paid $150 per month at today's average interest rate would have to pay $6,417 to pay off the debt. That's $183 more than would have been required on Jan. 1, 2010, when the national average APR was 12.97 percent. (Calculator: How long will it take to pay off your credit card balance?)

Those numbers aren't welcome to American consumers, especially as unemployment remains high and seems likely to remain so. Data released Monday by private payroll management company ADP showed that private-sector jobs decreased by nearly 40,000 nationwide in September. That and other sour economic data has prompted calls for the Federal Reserve to boost the struggling economy through, for example, increased purchases of Treasury bonds.

Fed officials are apparently listening.

"Further action is likely to be warranted unless the economic outlook evolves in a way that makes me more confident that we will see better outcomes for both employment and inflation before too long," said William C. Dudley, president of the New York Fed, in a speech on Oct. 1.

That outlook means that if credit card rates increase, it won't be the Fed to blame. Most credit cards in the United States carry variable rates that move up and down with the prime rate, which the Fed indirectly controls. If the Fed sees the economy as still shaky, it won't put the brakes on it by raising rates.

See related: Consumer credit card debt shrinks again in July, Calculator: How long will it take to pay off your credit card balance?Credit card rates: interactive graphic on APR changes

Published: October 6, 2010


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.




Follow Us


Updated: 09-25-2016


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


ADVERTISEMENT