Rate survey: Average card APR jumps to all-time high of 16.62 percent
The average credit card interest rate broke a new record this week, landing within rounding distance of 17 percent for the first time, according to the Weekly Credit Card Rate Report. The national average APR jumped to an all-time high of 16.62 percent after numerous credit cards tracked by CreditCards.com advertised higher rates.
CreditCards.com reviewed the APRs, annual fees and promotional terms of 100 of the most popular U.S. credit cards. Among the 100 cards included in the weekly rate report, 43 advertised higher rates this week.
In most cases, the higher advertised rates were due to the Federal Reserve’s March 2018 quarter-point rate hike. When the Federal Reserve increases interest rates, most variable rate cards eventually raise rates by the same amount.
Last week, 23 of the cards included in the Weekly Rate Report hiked rates by 0.25 percent. This week, 40 cards matched the Federal Reserve’s latest rate hike.
One card issuer, Pentagon Federal Credit Union, increased rates by significantly more. For example, it increased the lowest available APR on the PenFed Power Cash Rewards Visa card by a full percentage point, raising it to 10.99 percent. Meanwhile, it increased the minimum APR on the PenFed Promise Visa card from a low of 9.74 to 10.99 percent.
Another card included in the weekly rate report, the Cabela’s Club Visa, also increased rates this week. But unlike most U.S. credit cards, the Cabela’s Club retail card isn’t tied to the U.S. prime rate and so isn’t affected by the Federal Reserve’s rate changes. Instead, it’s tied to the one-month Libor rate. This week, the sporting goods store Cabela’s increased its store card’s lowest available APR from 16.65 to 16.87 percent. It raised the card’s maximum APR to 25.87 percent.
None of the cards monitored by CreditCards.com advertised new promotions.
Digital payments are becoming more popular
Consumers are becoming increasingly open to using alternative payment methods such as mobile wallets and virtual assistants to pay for goods and services, according to new research from the payment company TSYS.
TSYS surveyed more than 1,000 credit and debit card owners and found a growing number of cardholders are considering swapping out their plastic cards for digital payments – at least for some of their in-store and online purchases. For example, 51 percent of cardholders expressed interest in using their mobile phone to pay for something at a store. In 2016, by contrast, just 40 percent of consumers said the same.
Meanwhile, the percentage of cardholders who say they have already checked out of a store at least once using a mobile phone rather than a physical credit or debit card rose to 12 percent in 2017, up from just 7 percent in 2015.
Younger consumers are especially likely to embrace alternative payment methods. For example, among those between the ages of 25 and 34 who own an AI-enabled virtual assistant, such as Amazon’s Alexa or Google Home, 76 percent said they wouldn’t mind using their virtual assistant to make payments. Just 60 percent of virtual assistant owners overall said the same.
Meanwhile, nearly half of cardholders between the ages of 25 and 34 – 45 percent – have also used payment-to person (P2P) providers, such as PayPal or Zelle, to transfer money to other consumers. However, only 29 percent of cardholders overall said they’d used these services, indicating that older cardholders are more reluctant to use P2P apps to transfer money.
Old-fashioned plastic continues to be consumers’ top choice overall, TSYS found, despite increased interest in digital payments. For example, 44 percent of cardholders said they prefer to use their debit cards for payments. Thirty-three percent said they rather use credit cards, while 12 percent said they prefer cash.
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: April 4, 2018|
- Rate survey: Average card APR remains at record high of 17.14 percent – November 14, 2018: The average APR for new credit card offers stayed put Wednesday, remaining at an all-time record high for the second consecutive week ...
- Rate survey: Average card APR breaks new record, climbing to 17.14 percent – November 7, 2018: The average credit card interest rate continued its record-setting streak on Wednesday, climbing to another all-time high ...
- Rate survey: Average card APR keeps climbing to record 17.11 percent – October 31, 2018: The average credit card interest rate shattered another record this week. For the first time in at least a decade, the national average APR for new card offers hit 17.11 percent. ...