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Rate survey: Average card APR holds steady at 15.19%

The average credit card interest rate remained unchanged this week, according to the CreditCards.com Weekly Credit Card Rate Report.

For the seventh week in a row, the national average annual percentage rate (APR) stayed put at 15.19 percent — the highest rate in more than four years.

Most card issuers left interest rates alone this week. American Express expanded the range of possible APRs on the American Express Everyday card, but the change didn’t impact the national average because only the card’s highest possible rate was affected. CreditCards.com only takes into account a card’s lowest available interest rate when calculating average rates.

Applicants are now offered a range of APRs starting at 13.24 percent and maxing out at 23.24 percent — up from a previous high of 22.24 percent. American Express also trimmed the card’s promotional offer from 15 months to 12 months.

Homebuyers more likely to open new cards
Demand for new credit has picked up this year, according to research released in May by the Federal Reserve. But one particular set of borrowers is especially eager for more credit: New homebuyers.

According to research released May 26 by credit reporting agency TransUnion, recent mortgage applicants are more than twice as likely, on average, to apply for a new credit card or auto loan.

Consumers with the best credit scores are especially eager for new cards — perhaps so they can use that credit to spruce up their new homes or transfer over existing debt that piled up. According to TransUnion, consumers with good to excellent credit who have just applied for a home loan are more than 50 percent more likely than other borrowers to also apply for a new card.

Consumers were also more likely to apply for a new card within 30 days of paying off an existing mortgage.

House hunters step up credit card spending
Consumers don’t always wait for their mortgage application to go through, either, before they pick up their spending. Contrary to conventional wisdom, the study found that credit card spending by new homebuyers often spikes just before an offer is made on a new home.

According to TransUnion, this finding contradicts the mantra that cardholders tame spending just before purchasing a new home. Rather than cut back on new credit card purchases, consumers often charge up to two to three times more on their cards in the months leading up to a big move and then pull back once they’ve moved in and paid off their old home.  

“A long held assumption among lenders is that new mortgage applicants spend less on their credit cards prior to their mortgage closing event — either to ensure their credit picture does not change or simply because they anticipate spending more once they move into their new home,” said study co-author Charlie Wise in a news release. “Our research indicates that millions of consumers actually increase their card spending in the months before the new mortgage origination. Whether it’s to purchase furnishings or make updates to their existing property, many consumers who move increase their spending before moving into their new residence.”

CreditCards.com’s Weekly Rate Report
 Avg. APRLast week 6 months ago
National average15.19%15.19%14.96%
Low interest11.96%11.96%11.62%
Cash back15.30%15.30%15.27%
Balance transfer14.39%14.39%14.07%
Business13.12%13.12%12.85%
Student13.42%13.42%13.14%
Airline15.17%15.17%14.91%
Reward 15.30%15.30%15.09%
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: June 1, 2016

See related:What to expect as ATMs switch to chip cards, Study: Most prepaid cards fail to disclose fees

What’s up next?

In Rate Report

Rate survey: Average card APR remains at 15.19 percent for a 6th week

May 25, 2016: Interest rates on new credit card offers held still this week, according to the CreditCards.com Weekly Credit Card Rate Report.

Published: May 25, 2016

See more stories
Credit Card Rate Report Updated: May 22nd, 2019
Business
15.61%
Airline
17.50%
Cash Back
17.60%
Reward
17.62%
Student
17.79%

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