Rate survey: Credit card APRs see 1st drop in 3 months

CreditCards.com's Weekly Rate Report
  Avg. APR Last week 6 months ago
National average 14.99% 15.00%
Low interest 10.73%
10.73% 11.18%
Balance transfer 12.77%
Business 13.13%
Airline  14.44%
Cash back  14.70%
Reward 14.70%
Instant approval 15.99%
Bad credit 24.96%
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: Oct. 19, 2011

Interest rates on new credit card offers fell for the first time since July, according to the CreditCards.com Weekly Credit Card Rate Report.

The average annual percentage rate (APR) dipped to 14.99 percent. It's the first decrease in three months. It's also the first time in eight weeks that rates have not been at record highs.

This week's move was spurred by a change Chase spurred the move by lowering the APR of its Marriott Rewards Visa Signature card. The card had carried an APR of 15.24 percent, but that rate was trimmed to 14.24 percent. Chase spokesman Steve O'Halloran confirmed the change.

"Chase offers a number of cards with different rates and benefits, which is why we encourage customers to choose the card that is best for them," O'Halloran said.

Shopping around is a good idea when making any financial decision, and getting a credit card is no exception. Hotel rewards cards typically carry higher APRs than other credit cards and usually have an annual fee tied to them, as do other types of rewards cards. There can even be big differences among hotel rewards cards.  

  • The Marriott Rewards Visa Signature card, for example, features an 14.24 percent APR. It has no annual fee for the first year, but a $45 annual fee each year after that.
  • The Starwood Preferred Guest credit card from American Express also has no annual fee for the first year -- it jumps to $65 each year after that -- but comes with a higher APR, a range of 15.24 percent to 19.24 percent.

That APR difference means real money. For example, a typical cardholder who borrowed $5,000 on a credit card today and consistently paid $150 per month at 19.24 percent would have to pay $2,210 in interest to pay off the debt. That's $800 more than would be required if your rate stood at 14.24 percent -- and that's before any annual fee costs are factored in. (Calculator: How long will it take to pay off your credit card balance?

Even though this week's national APR average inched lower, it still remains just one tenth of a percentage point below its all-time record high of 15 percent -- where it stood just last week. Meanwhile, signs seem to indicate that the economy is still struggling.

The latest Beige Book report -- the Federal Reserve's periodic, anecdotal survey of economic conditions around the nation -- drove home that point. It said that the U.S. economy continues to expand, but only slightly. However, there are reasons for optimism, economists say. "The economy is in a better place today than it was just a couple of months ago. With a resolution in Europe gaining momentum, markets have responded positively to the steps that policy makers are taking," said David Nice, associate economist at Mesirow Financial.

"The recent news out of Europe has helped to shore up investor confidence in the near term. If European policy makers continue to make strong and decisive strides to solve their debt issues, I see investor confidence strengthening along with overall consumer confidence. This improved confidence should allow this recent dip in credit card rates to become a trend," Nice said.

However, Nice cautioned that the global economy isn't out of the woods yet.

"In the global economy, significant downside risks still persist," Nice said. "If the talks in Europe were to be derailed, investor confidence could falter and lower banks' appetite for risk. In which case, credit card rates would continue to rise and the recent dip would become just an anomaly."

See related: Calculator: How long will it take to pay off your credit card balance?

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Updated: 12-10-2018