Average card APR breaks new record, climbs to 16.41 percent

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The average credit card interest rate smashed another record this week, climbing to an all-time high of 16.41 percent, according to the CreditCards.com Weekly Credit Card Rate Report.

Several card issuers revised interest rates. The variable APR for the Discover it Balance Transfer card, for example, now ranges from 13.99 percent to 24.99 percent.

Two military card issuers, Pentagon Federal Credit Union and Navy Federal Credit Union, also boosted rates this week. Both issuers increased APRs by a quarter of a percent in response to the Federal Reserve’s December 2017 rate hike.

Pentagon Federal Credit Union increased the minimum APRs on the Power Cash Rewards card and the Promise Visa to 9.74 percent.

Meanwhile, Navy Federal Credit Union pushed up the minimum APR on its Cash Rewards card to a low of 9.99 percent. It also increased the minimum APR on the Platinum card to 9.74 percent.

A few retail cards also increased rates by a quarter of a percent this week. The grocery chain Meijer increased the APR on the Meijer MasterCard to a range starting at 21.24 percent and maxing out at 25.24 percent.

Meanwhile, the gas station Texaco increased the APR on the Texaco Visa to 28.24 percent.

Rates were also affected this week by a card change in the CreditCards.com database. American Express is no longer offering the Blue Sky card to online applicants and was replaced with a similar card with a slightly lower interest rate.

Starbucks debuts new premium rewards card

After teasing the card in a November earnings call, Starbucks has finally launched its premium rewards card, the Starbucks Rewards Visa card. But the new Starbucks card isn’t nearly as generous as some java fans hoped.

In exchange for paying a $49 annual fee, Starbucks cardholders will get just 1 “star” rewards point for every $4 spent on purchases they make outside of Starbucks and 3 “star” points for every dollar spent on Starbucks coffee drinks and other Starbucks purchases. Most credit cards, by contrast, offer at least 1 point for every dollar in general spending.

In addition, the new Starbucks card offers a 2,500 point bonus when you spend $500 in the card’s first three months, eight free Barista-curated drinks distributed throughout the year and upgraded Gold status in the Starbucks rewards program.

Cardholders can redeem their points for Starbucks specialty drinks and other café purchases.  

Co-branded cards continue to proliferate

In addition to the new Starbucks card, a number of co-branded credit cards have launched in recent months.

In January, American Express began offering two new premium hotel credit cards for fans of the Hilton hotel chain. The premium cards offer significantly more benefits than their American Express predecessors, including free annual hotel stays for moderate spenders, hotel lounge passes, hefty point bonuses and more.

The ridesharing company Uber also launched a co-branded credit card in the fall of 2017 that offers some of the most generous dining rewards on the market.

Meanwhile, the hotel chain Marriott announced in December that it plans to debut some new co-branded credit cards sometime in 2018. The new Marriott lineup will include a super premium card for big spenders, as well as a more accessible travel card. However, Marriott hasn’t yet shared specific details about the cards’ rewards programs.

The popular furniture store Ikea is also getting ready to launch a new co-branded credit card. Ikea announced in January that it is teaming up with the payment company Alliance Data on a loyalty card Ikea fans can use to buy new furniture or housewares or pay for other non-Ikea purchases. Ikea hasn’t said when the card would launch or what rewards it will offer.

CreditCards.com's Weekly Rate Report
  Avg. APR Last week 6 months ago
National average 16.41% 16.39%
Low interest 13.14%
13.09% 12.87%
Cash back 16.67%
Balance transfer 15.63%
Business 13.93%
Student 15.92%
Airline 16.41%
Reward  16.51%
Instant approval 18.82%
Bad credit 23.62%
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: Feb. 7, 2018

See related: Historic credit card rates chart, Buy bitcoin with credit cards? Big banks say 'no', 8 ways to earn Ultimate Rewards points

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Updated: 12-12-2018