Rate survey: Average card APR sits tight at 16.41 percent

Kelly Dilworth
Personal finance writer
Specializing in new trends in credit

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Interest rates on new credit card offers held steady this week, according to the CreditCards.com Weekly Credit Card Rate Report.

CreditCards.com reviewed the APRs, annual fees and promotional terms of 100 of the most popular U.S. credit cards.

Nearly all the cards included in the CreditCards.com database of cards left interest rates unchanged this week. It is the fourth week in a row that rates have not budged.

The sporting goods store Cabela’s bumped up the APR on the Cabela’s Club Visa card by less than one-tenth of a percentage point, but the change was too small to affect the national average.

Consumers who apply for the Cabela’s Club Visa card are now charged a range of APRs starting at 16.65 percent and topping out at 25.65 percent.

None of the cards reviewed modified promotional terms, such as 0 percent balance transfers or interest-free purchase offers.

One card tracked by CreditCards.com, the Marriott Rewards Premier card, appears to be testing a higher annual fee. Occasionally, credit card issuers test online offers and display different terms to online visitors. Some credit card applicants were offered an $85 annual fee on the Marriott Rewards Premier card this week where others were offered a $99 fee, both of which are waived the first year.

Concern grows for cardholders' balance sheets

Credit card analysts are growing increasingly concerned about cardholders’ ability to pay their bills.

According to The Wall Street Journal, small banks especially are reporting higher credit card losses, sparking concerns that a growing percentage of consumers are carrying more debt than they can afford.

The Journal’s analysis of Federal Reserve data found that credit losses at small banks have grown at a much faster pace than losses at big banks, in part because customers at small banks often have lower credit scores than cardholders doing business with bigger banks.

Small banks, for example, registered a 7.17 percent charge-off rate in the fourth quarter of 2017 – the second highest charge-off rate small banks have recorded since 2010. In the third quarter, small banks absorbed a 7.9 percent charge-off rate.

The rate at which small banks wrote off debt expanded rapidly in 2017. In the fourth quarter of 2016, for example, small banks reported a charge off rate of 4.53 percent. Losses at big banks, by contrast, registered at just 3.48 percent in the fourth quarter of 2017, up from 3.32 percent the previous year.

Credit card bills are tagged as “charge-offs” when consumers repeatedly fail to pay their bills and banks write off the loans as uncollectible.

Charge-offs and seriously late payments have risen significantly in recent years as lenders welcome more cardholders with lower scores. Additional factors, such as rising interest rates, may also be squeezing some lower-income cardholders who are struggling to pay even the minimum amount due.  

Small banks aren’t the only banks seeing a notable uptick in late payments either. Three separate reports released earlier this year by the FDIC, New York Federal Reserve and the credit rating agency TransUnion found that bills that are least 90 days overdue have risen on a range of credit card loans.

Lenders have cut back on the number of applications they approve – particularly for cardholders with lower credit scores, TransUnion found.

“The number of consumers with access to card credit remains at an all-time high,” said TransUnion’s Paul Siegfried in a news release. However, credit card originations – newly opened card accounts – declined in the third quarter of 2017, in part because lenders were rejecting more applicants with damaged credit. “The demonstrated pullback is likely a response to the increased ratio of below-prime consumers issued credit in recent years and the associated uptick in credit card delinquencies,” said Siegfried.

CreditCards.com's Weekly Rate Report
  Avg. APR Last week 6 months ago
National average 16.41% 16.41%
16.14%
Low interest 13.14%
13.14% 12.88%
Cash back 16.67%
16.67%
16.37%
Balance transfer 15.63%
15.63%
15.37%
Business 13.93%
13.93%
13.68%
Student 15.92%
15.92%
15.70%
Airline 16.41%
16.41%
16.07%
Reward  16.51%
16.51%
16.23%
Instant approval 18.82%
18.82%
18.60%
Bad credit 23.62%
23.62%
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: March 7, 2018

See related: Historic credit card rates chart, Late payments on cards worsen as balances rise, N.Y. Fed says


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Updated: 06-23-2018