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Survey: Average card APR remains near record high

Summary

May 4, 2016: Average rates on new credit card offers remained unchanged this week, according to the CreditCards.com Weekly Credit Card Rate Report.

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Average rates on new credit card offers remained unchanged this week, according to the CreditCards.com Weekly Credit Card Rate Report.

For the third straight week, the national average annual percentage rate (APR) remained at 15.19 percent – a more-than-four-year high.

Most issuers left their credit card rates and promotional offers unchanged this week. The sporting goods store Cabela’s increased the APR on the Cabela’s Club Visa card by 0.01 percent. However, the change was too small to affect the national average. Cabela’s fans are now offered an APR ranging from 15.43 percent to 21.43 percent. The Cabela’s card is a rarity in the U.S. market in that it is indexed to the Libor rate. That rate is more volatile than the U.S. prime rate, the index rate for most cards issued by American banks.

Average rates on new credit card offers are currently at their highest point since December 2011. Most cards included in the CreditCards.com database increased their rates by a quarter of a percentage point earlier this year after the Federal Reserve raised its benchmark interest rate.

Consumers opening more card accounts
Despite higher rates on new card offers, consumer appetite for new credit cards has grown in recent months.

According to research released May 3 by the American Bankers Association, consumers opened over 16 percent more credit card accounts in the fourth quarter of 2015 than they did toward the end of 2014. As a result, the total number of open credit card accounts expanded to 323 million – a post-recession high, according to the association.

Consumers with lower credit scores opened new cards at the fastest pace. For example, banks opened 26 percent more subprime card accounts in the fourth quarter of 2015 than the previous year. Super prime card accounts – cards belonging to consumers with the best credit scores – also enjoyed double-digit growth, the association’s report said.

Banks are also approving larger credit limits, especially for consumers with good to excellent credit. Consumers with super prime credit scores enjoyed a nearly 2.5 percent increase in the average amount of available credit. Average credit lines for new cardholders with excellent credit grew to $9,447 in the fourth quarter. Meanwhile, consumers at the second-highest credit tier – prime credit – saw their average credit limits increase by more than 1.5 percent to an average of $5,175.

Credit lines for consumers with subprime card accounts, by contrast, remained relatively steady as banks kept a tight rein on the amount of credit they’re willing to lend to consumers with blemished credit histories. The average subprime cardholder with a new account is allowed just $2,366 in available credit.

Consumer spending continues to increase
As consumer card credit limits increase, many cardholders are also boosting credit card spending. The association’s report found consumers with the lowest credit scores increased spending by nearly 6 percent compared to the previous year. Meanwhile, consumers with excellent credit increased spending by just over 3 percent in the fourth quarter.

The total amount of debt consumers carried in proportion to their incomes jumped in the fourth quarter of 2015 as well. But the total amount of debt consumers are carrying is still relatively low compared to previous years when consumers were less thrifty. “Even as consumers more actively use their credit cards, they continue to do a good job of managing credit to ensure they’re spending within their means,” said the American Bankers Association’s Jess Sharp in a news release.

CreditCards.com’s Weekly Rate Report, May 4, 2016
Avg. APRLast week 6 months ago
National average15.19%15.19%15.01%
Low interest11.96%11.96%11.62%
Cash back15.30%15.30%15.27%
Balance transfer14.39%14.39%14.12%
Business13.12%13.12%12.85%
Student13.42%13.42%13.14%
Airline15.17%15.17%15.14%
Reward15.30%15.30%15.15%
Instant approval18.04%18.04%18.00%
Bad credit22.56%22.56%22.73%
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: May 4, 2016

See related:Fed holds interest rates steady for now

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Credit Card Rate Report Updated: June 19th, 2019
Business
15.61%
Airline
17.54%
Cash Back
17.68%
Reward
17.57%
Student
17.79%

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