Rate survey: Credit card interest rates remain unchanged

Credit card interest rates held steady this week, according to the CreditCards.com Weekly Rate Report.  

CreditCards.com's Weekly Rate Report
  Avg. APR Last week 6 months ago
National average 15.00%
Low interest 10.40%
10.40% 10.73%
Balance transfer 12.60%
Business 13.13%
Cash back  14.45%
Airline  14.63%
Reward 14.83%
Instant approval 15.49%
Bad credit 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: March 28, 2012

The national average annual percentage rate (APR) on new credit card offers remained fixed at 15 percent Wednesday after three straight weeks of movement.

This week marks just the eighth time that average interest rates hit 15 percent or higher since CreditCards.com began tracking rates in mid-2007. Average rates hit a record high of 15.22 percent Dec. 14 and have hovered above or just below 15 percent ever since.

Experts say that this year's higher rates mean consumers should be more careful than ever about signing up for a new card. This is especially true if you're short on cash, says Andrew Schrage, co-owner of the personal finance blog Money Crashers. "You shouldn't be signing up for credit cards as a way to finance purchases you otherwise cannot afford, especially in this day and age of record high interest rates," says Schrage.

Higher APRs on rewards cards partially to blame
Consumers are seeing higher interest rates partially because rewards card offers -- which make up the bulk of offers that consumers receive in the mail -- feature higher APRs these days. That has pushed up the national average for all the cards that CreditCards.com tracks.

Three-quarters of all card offers feature some sort of rewards incentive, according to Roy Persson, director of competitive tracking services at the market research firm Synovate. (That figure falls in line with CreditCards.com data, which shows that three quarters of the cards we track are rewards cards.)

To get a sense of just how significant changes to rewards card offers have been to the national average, consider this. The same week the national average soared to a record high of 15.22 percent, the average APR for rewards card offers hit a record high of 14.86 percent. Both rate hikes occurred because J.P. Morgan Chase increased the lowest available APR on several of the bank's rewards cards. Since then, each time the national average has spiked, average APRs for rewards cards have also increased.

Rewards are sweeter, but they're also pricier
Rewards credit cards are notorious for featuring high APRs. However, recent changes to new card offers have made carrying a balance on a rewards card especially expensive. For example, if a cardholder borrows $5,000 on a rewards card today and consistently pays $100 per month at 14.83 percent interest, they will have to pay a whopping $2,834 in interest to clear their balance. That's $179 more than they would have had to pay a year ago when the average APR on rewards cards was 14.32 percent. (Calculator: How long will it take to pay off your credit card balance?)

That said, the actual rewards that new cardholders can take advantage of are getting better, say experts. Despite the higher APRs, today's rewards card offers feature bigger rewards, fatter sign-on bonuses or both, says Synovate's Persson. "The rewards and incentives are getting richer," says Persson. But card issuers are being choosy about who receives the best offers, he adds, and the total number of offers that card issuers are sending out has declined since October. 

Meanwhile, consumers who are in the market for a new rewards card appear to be thinking more about long-term rewards than short-term gain. According to a recent poll by Capital One, 49 percent of cardholders say that they are more likely to be swayed by bigger rewards per dollar spent than by fatter one-time sign-on bonuses. 

See related: Credit card rate offer 'ranges' make comparison shopping tough

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Updated: 03-23-2019