The average APR on new credit card offers rose to another record high, according to the CreditCards.com Weekly Credit Card Rate Report.
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The average APR on new credit card offers rose to another record high, according to the CreditCards.com Weekly Credit Card Rate Report. The national average annual percentage rate (APR) climbed to 17.73 percent, which is the highest weekly average CreditCards.com has recorded since it began tracking rates in mid-2007.
The average APR for new credit cards is now more than a full percentage point higher than it was a year ago when it stood at 16.71 percent. Three years ago, new card applicants saw even lower rates on average. In May 2016, for example, the average card APR registered at 15.19 percent – more than two and a half points lower than it stands now.
Consumers with less-than-perfect credit scores are being offered especially high interest rates. The national average APR only takes into account a card’s lowest available APR. However, most consumer credit cards advertise a wide range of interest rates, including maximum rates that are typically well above 20 percent.
The average maximum card APR, for example, currently stands at 24.99 percent. Meanwhile, the average median card APR is currently 21.36 percent.
Every week, CreditCards.com reviews the APRs, annual fees and promotional terms of 100 U.S. credit cards. Occasionally, it refreshes the cards that are included in the weekly rate report calculation in order to better reflect the current card market.
The average card APR increased this week, for example, because of a change in hotel business cards. The Radisson Rewards Business Visa card is currently unavailable to online applicants. So CreditCards.com replaced it in the database with another hotel business card, the Hilton Honors American Express Business card, which charges a slightly higher APR.
See related: Historic credit card interest rates chart
Surveys: Consumers want rewards, but are dissatisfied with annual fees
Interest rates on brand-new rewards cards have climbed at an especially fast clip in recent years as card issuers tweak their rewards programs. The average APR for rewards cards, for example, is currently 17.62 percent, up from 16.81 percent a year ago.
However, despite the higher rates, consumers continue to have a strong appetite for rewards. According to new research released May 8 by U.S. News and World Report, some consumers are even willing to apply for new cards solely for the free perks.
For example, 18 percent of consumers polled by U.S. News said that they’d apply for a brand-new card just so they could use their rewards to help fund a vacation.
And a new survey by CreditCards.com found 27 percent of consumers who carry balances month-to-month rank 3 percent cash back as their favorite credit card feature – despite high APRs.
A separate survey by Discover, though, suggests high annual fees may be holding many applicants back, even though the best sign-up bonuses typically go to consumers willing to pay a larger fee. Sixty percent of respondents to a survey released May 7, for example, said they prioritized cards without an annual fee.
Meanwhile, 54 percent of applicants who said they were thinking about replacing their current cards cited their cards’ annual fees as a key reason.
Although travel rewards appear to be a big draw for consumers willing to pay an annual fee, the Discover survey found many cardholders come to regret their decision once a card’s sign-up bonus is in the rearview mirror.
“Our survey found that the most popular benefits for paying an annual fee are to receive cash back rewards (52 percent) and travel benefits/rewards (48 percent),” wrote Discover’s Andrew Hopkins in a news release.
However, 37 percent of respondents admitted to eventually closing a card because they no longer wanted to pay the card’s annual fee. Meanwhile, 32 percent said that they regretted opening a card with an annual fee once they hit the 12-month mark – which is when cardholders are typically charged to keep their new cards open.
See related: Guide to rising credit card interest rates
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: May 8, 2019|