Rate survey: Average card APR remains at record high of 16.32 percent

Kelly Dilworth
Personal finance writer
Specializing in new trends in credit

The average credit card APR held steady at 16.32 percent this week, according to the CreditCards.com Weekly Credit Card Rate Report.

A handful of cards included in the weekly rate report advertised slightly higher APRs. Both SunTrust and U.S. Bank boosted APRs by a quarter of a percent in tandem with the Federal Reserve’s December 2017 rate hike. But the changes were too small to affect the national average.

Since the Federal Reserve hiked the APR on its benchmark interest rate, the federal funds rate, most major card issuers have revised rates upward by the same amount. As a result, the national average APR broke a new record this month when it hit 16.32 percent.

Most card issuers also left promotional terms unchanged this week. However, two lenders sweetened the promotional terms on some of their cards. Wells Fargo extended the 0 percent promotional offer on its rewards card from 12 to 15 months. Meanwhile, Navy Federal Credit Union reintroduced a 12-month, 0 percent balance transfer offer to its line of credit cards.

Card balances expand to record high
Consumers are continuing pack on credit card debt and use their cards more freely. According to new research from the Federal Reserve, revolving debt jumped to a record high in November as more cardholders turned to credit to pay for purchases.

Credit card debt expanded by more than 13 percent, indicating that cardholders are undaunted by the rising cost of credit.  

The Federal Reserve’s latest consumer credit report bolsters previous research – as well as reports from card-issuing banks – that cardholders are continuing to charge larger amounts to their cards, despite steadily increasing interest rates.

The American Bankers Association’s latest Credit Card Market Monitor, released in October, for example, found that credit card purchases increased by 9 percent in the second quarter of 2017.

Average card APRs have risen by more than a full percentage point since the Federal Reserve first began hiking rates in December 2015 – a large enough increase to make a significant impact on hefty balances.

However, fewer than half of all cardholders are affected by the rate increases: According to the American Bankers Association, for example, just 43 percent of cardholders revolved a balance in the second quarter of 2017.

Late card payments dip despite rising card balances
The uptick in rates and balances has caused a growing number of cardholders to fall behind on their bills. According to research from the credit reporting agency TransUnion, late payments on credit cards have increased significantly since the fourth quarter of 2015, in part because of pricier credit.

TransUnion predicted late payments on credit cards would continue to become somewhat more common over the next year. However, new research from the American Bankers Association shows cardholders, for the most part, are still managing to maintain control over their balances, despite increasing card APRs.

Research released Jan. 9 found late payments on cards issued by banks actually declined slightly in the third quarter of 2017, falling from 2.67 to 2.62 percent. Overall, delinquencies – late payments by 30 days or more – are more common than they were in 2014, but they’re still relatively rare by historical standards.

“Consumers continue to take a disciplined approach to managing their credit cards, which has kept delinquencies in this category near historical lows for more than five years,” said ABA chief economist James Chessen in a news release.

CreditCards.com's Weekly Rate Report
  Avg. APR
Last week 6 months ago
National average 16.32% 16.32%
16.06%
Low interest 13.08%
13.07% 12.87%
Cash back 16.56%
16.55%
16.26%
Balance transfer 15.56%
15.55%
15.30%
Business 13.91%
13.87%
13.86%
Student 15.92%
15.92%
15.14%
Airline 16.26%
16.25%
15.99%
Reward  16.41%
16.40%
16.14%
Instant approval 18.74%
18.74%
18.51%
Bad credit 23.59%
23.59%
23.43%
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: Jan. 10, 2018

See related: Historic credit card rates chart, Fed data: We're using credit cards for smaller purchases, Low interest, plain vanilla cards rare from major issuers


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Updated: 12-11-2018