Rate survey: Average card APR ticks up to record 16.39 percent

Kelly Dilworth
Personal finance writer
Specializing in new trends in credit

The average credit card interest rate inched higher this week, breaking another 10-year record, according to the CreditCards.com Weekly Credit Card Rate Report.

The national average APR rose to 16.39 percent after several card issuers adjusted rates. The average card APR is currently at its highest point since CreditCards.com began tracking rates in mid-2007.

Several retail cards increased rates by a quarter of a percent this week, matching the Federal Reserve’s December 2017 rate hike.

The minimum APR on the Walmart Mastercard, for example, rose to 18.15 percent, while the card’s maximum rate increased to 24.15 percent.

The Gap Visa card advertised a 26.24 percent interest rate. Meanwhile, the gas card, BP Visa, advertised a 28.24 percent interest rate.

Subprime lender Credit One also matched the Federal Reserve’s rate hike. The minimum APR on the Credit One Visa Platinum card rose to 17.24 percent, while the card’s maximum APR climbed to 25.24 percent.

As interest rates rise, more cardholders are revolving a balance

Interest rates have risen steadily over the past two years as the Federal Reserve gradually increases the prime rate. Since January 31, 2016, the average card APR has climbed by 1.25 percent – a large enough increase to potentially add hundreds of dollars to cardholders with large, revolving card balances.

As a result, the total amount of interest that issuers collect has risen significantly, according to the American Bankers Association.

But the higher rates haven’t stopped cardholders from carrying balances. According to the American Bankers Association’s latest Credit Card Market Monitor, released Jan. 30, the percentage of cardholders who revolve a balance rose to 43.7 percent of all accounts in the third quarter of 2017. The percentage of cardholders who pay their balances in full, in turn, fell to 29.1 percent of all accounts.

Meanwhile, just over 27 percent of all open credit card accounts are being left unused.

Growth in card applications has slowed somewhat

Consumers are also applying for more credit cards, research from the American Bankers Association shows. But they aren’t opening cards at nearly as fast a clip as they were in previous years when the growth in new card accounts – particularly subprime cards – rose sharply.

“The number of new accounts (those opened in the previous 24 months) increased at its slowest annual pace in over six years,” the American Bankers Association wrote in a news release. The growth in the total number of open card accounts also slowed. “Though growth occurred across risk tiers, growth in credit card account volume is significantly slower in 2017 than it was in 2016.”

Lenders appear to be particularly cautious about opening accounts for consumers with less-than-perfect scores. Between 2016 and 2017, for example, the growth in subprime cards was flat after increasing by roughly five million accounts the previous year. 

By far, the largest percentage of new accounts opened in 2017 belonged to consumers with good to excellent credit.

Credit limits inch up

Lenders have been more generous about the total amount of credit they allow cardholders with imperfect to borrow, though.

For example, the average credit limit for new subprime accounts rose by 0.7 percent to $2,566. The average limit for new prime accounts rose by 1.2 percent to $5,692.

The average credit limit for new super prime accounts was flat. But consumers with excellent credit still get access to far more credit than consumers with lower scores. Consumers with the best credit scores enjoyed an average credit limit of $10,396 – nearly twice the size of the next lowest risk tier.

CreditCards.com's Weekly Rate Report
  Avg. APR Last week 6 months ago
National average 16.39% 16.38%
16.11%
Low interest 13.09%
13.09% 12.84%
Cash back 16.61%
16.60%
16.34%
Balance transfer 15.64%
15.64%
15.34%
Business 13.93%
13.93%
13.68%
Student 15.92%
15.92%
15.64%
Airline 16.47%
16.47%
16.06%
Reward  16.50%
16.48%
16.20%
Instant approval 18.80%
18.76%
18.55%
Bad credit 23.62%
23.59%
23.46%
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. 31, 2018

See related: Historic credit card rates chart, What the new Fed Chair Jerome Powell means for consumers


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Updated: 08-20-2018