January 9, 2019: The average credit card interest rate stayed put Wednesday, remaining at an all-time record high.
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Average card rates are now more than a full percentage point higher than they were this time last year and are poised to keep increasing.
Most credit card issuers monitored by CreditCards.com left interest rates alone this week. However, a number of lenders, including Chase, have yet to match the Federal Reserve’s December 2018 rate hike. Once they do, the average credit card interest rate is all but certain to increase.
When the Fed raises interest rates, most variable rate cards increase rates by the same amount.
This week, the only rate change CreditCards.com recorded was on the Deserve Edu MasterCard. Deserve increased the APR on its student card by a quarter of a percent in tandem with the Fed’s rate change. Students who are thinking about applying for the card are now presented with a single APR of 20.99 percent.
Every week, CreditCards.com monitors the APRs, annual fees and promotional terms of 100 U.S. credit cards.
Navy Federal Credit Union rolls out introductory APR
Most cards included in the weekly rate report also left promotional rates alone this week. Navy Federal Credit Union was the lone exception. It introduced a new low rate promotion to the Navy Federal Credit Union Cash Rewards card that allows cardholders to carry a balance at a rock bottom interest rate. New cardholders can now take advantage of a 1.99 percent APR on purchases for up to 12 months. Previously, Navy Federal Credit Union didn’t offer a promotional APR on new purchases.
New cardholders who transfer a balance will also enjoy a lower rate as long as they request their balance transfer within 30 days of opening the account. However, they will now have to pay some interest on the balance, rather than enjoying a 0 percent promotional rate.
Before this month, new Cash Rewards cardholders could carry a transferred balance for up to six months interest-free. Now, cardholders who request a balance transfer within the card’s first month are charged a 1.99 percent APR for 12 months.
Navy Federal Credit Union members who would prefer an interest-free balance transfer can still get one through a different Navy Federal card, though. The Navy Federal Credit Union Platinum Card, for example, still gives cardholders up to 12 months to pay off their transferred balances without incurring any interest.
Card debt expands as consumers charge holiday purchases and other expenses
As credit card interest rates continue to rise, many cardholders are also contending with markedly higher balances. According to the Fed’s latest G.19 consumer credit report, revolving debt expanded by $4.8 billion in November as consumers increasingly turned to cards to finance their purchases and paid off their debts more slowly.
Several surveys released over the past month have found shoppers ramped up their holiday buying this year compared to last year.
According to Mastercard’s SpendingPulse, for example, retailers rung up more than $850 billion in holiday sales, up 5.1 percent from the previous year.
Meanwhile, online holiday purchases, which are often fueled by credit cards, really surged this year, climbing by 19.1 percent.
“From shopping aisles to online carts, consumer confidence translated into holiday cheer for retail,” said Mastercard’s Steve Sadove in a news release.
The uptick in purchases could lead to some post-holiday regret for some consumers, though, as rising rates make credit card balances significantly more expensive.
Retail purchases are likely to slow down significantly over the next month as consumers try to catch up from the holiday season and slim their budgets for the new year.
CreditCards.com’s Weekly Rate Report
|Avg. APR||Last week||6 months ago|
|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.)|
|Updated: Jan. 9, 2019|