Rate survey: The average credit card interest rate remains at record high

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The average credit card interest rate remained at a record high Wednesday, according to the CreditCards.com Weekly Credit Card Rate Report. The national average credit card APR held steady at 16.73 percent.

CreditCards.com reviewed the APRs, promotional terms and annual fees of 100 U.S. credit cards. None of the cards included in the weekly rate report advertised new interest rates. Issuers also left promotional terms, such as 0 percent balance transfer offers, unchanged.

The average card APR is currently at its highest point since CreditCards.com began tracking rates in mid-2007. Interest rates have climbed steadily in the past years as the Federal Reserve gradually increases interest rates and issuers revise new offers.

A year ago, the average card APR stood at 15.79 percent – nearly a full percentage point lower than it is now. In May 2015, it registered at just 14.99 percent.   

Consumers can expect to pay more to carry a balance for some time – especially since most credit card lenders show no sign of voluntarily trimming rates.

The Federal Reserve plans to continue to gradually increase the federal funds rate, which affects most variable rate loans, including credit cards. When the Federal Reserve increases its benchmark federal funds rate, credit card issuers typically match it, too.

The last time, the average card APR fell was in December when it slipped by just 0.01 percent. In 2017, the weekly card APR increased 24 times and declined just three times. It hasn’t declined once in 2018. 

Consumers receiving fewer card promotions

Issuers are also cutting back on the number of 0 percent promotional offers they mail to prospective cardholders. According to research released by the financial services firm Credit Suisse, 0 percent purchase offers appeared in just 169 million credit card mailers last month – down from 177 million in March. Overall, just 59 percent of card offers that issuers mailed contained an offer for a 0 percent interest rate on new purchases.

That’s the lowest level of interest-free purchase offers consumers have received since 2010. Issuers also mailed fewer balance transfer offers. Around 62 percent of the offers consumers received contained a balance transfer offer.

The average duration for 0 percent balance transfer offers was somewhat higher in April than it was in March. But year-over-year, the amount of time that issuers give cardholders to transfer their balances interest-free has dropped significantly, indicating that issuers are typically less generous than they were last year. In April 2018, for example, issuers gave new cardholders about 13.6 months on average to carry a transferred balance interest-free. In 2017, the average balance transfer period clocked in at 14.4 months.

More consumers using mobile apps for everyday payments

Despite higher card rates and fewer promotional offers, consumers are increasingly using their cards for everyday purchases – including through their phones.

According to new data from the market research firm, eMarketer, a growing number of credit and debit card holders are charging everyday purchases, such as coffee or a lunch out, on their phones, rather than dipping or swiping a physical card.

The market research firm estimates that the number of consumers using their phones to make in-store payments will grow to 55 million this year. Meanwhile, more than a quarter of all smartphone users over the age of 14 are expected to pay for something in-store using their phones at least twice a year, said eMarketer.

Paying for a Starbucks run using the chain’s mobile payment app is the most popular way to make an in-store mobile payment, eMarketer found. Apple Pay is the second most popular payment app, with Google Pay and Samsung Pay following close behind.

See related: Guide to mobile wallets: Samsung Pay, Apple Pay and Google Pay

Brand-new payment apps are also continuing to appear. Retailers, in particular, are expected to jump on the mobile app bandwagon and try to convince more consumers to pay for purchases with their own proprietary app, said eMarketer. “Retailers are increasingly creating their own payment apps, which capture valuable data about their users,” said eMarketer forecasting analyst Cindy Liu in a news release. “They can also build in rewards and perks to boost customer loyalty.”

CreditCards.com's Weekly Rate Report

  Avg. APR Last week 6 months ago
National average 16.73% 16.73%
Low interest 13.58%
13.58% 12.89%
Cash back 16.99%
Balance transfer 15.96%
Business 14.34%
Student 16.26%
Airline 16.66%
Rewards 16.81%
Instant approval 19.05%
Bad credit 23.77%
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 23, 2018

See related: Poll: Half of balance-carrying cardholders clueless about their APRs, Historical credit card rates, 2007-2018


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Updated: 02-18-2019