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The average credit card interest rate sailed to another record high this week, according to the CreditCards.com Weekly Credit Card Rate Report.
Several credit card issuers revised interest rates this week. As a result, the national average credit card APR jumped to an all-time high of 16.75 percent
The regional bank Comerica posted the most dramatic change, hiking the minimum APR on the Comerica Visa Platinum card from 11.49 to 13.49 percent. It left the card’s maximum APR alone at 22.49 percent.
Meanwhile, two store cards advertised more modest rate changes. The retail superstore Walmart, for example, increased the minimum APR on the Walmart MasterCard from 18.15 to 18.40 percent. It increased the card’s maximum APR by the same amount to 24.40 percent.
The sporting goods store Cabela’s also increased rates this week. It boosted the APRs on the Cabela’s Club Visa to a range starting at 16.97 percent and maxing out at 25.97 percent.
Average rates on new card offers have climbed by nearly a full percentage point over the past year and show no signs of slowing down. As the Federal Reserve continues to gradually increase interest rates, most card issuers are increasing rates by the same amount. As a result, new cardholders are currently paying more, on average, to carry a balance than they have at any other time since 2007.
Consumers slow to warm up to frictionless payments
Despite higher interest rates on credit cards, consumers are still using their cards regularly. Several reports have found consumers are increasingly turning to credit cards, rather than debit cards or cash, to fund their everyday purchases.
The cards that consumers are using for in-store purchases, though, are almost always physical cards that are swiped or dipped into a card reader, rather than digital cards loaded onto apps on phones. According to new research from the payment processing company Paysafe, many consumers are still too nervous about safety to use payment apps on a mobile phone over physical cards or cash.
For example, the survey found a sizable number of consumers are still concerned their credit card details will be stolen, or their personal data compromised. For example:
- 50 percent of consumers said that they hesitate to use contactless payments because of fraud concerns.
- 52 percent are worried about the safety of their personal information.
Consumers are also skeptical about new technology, such as voice-activated payments and stores that allow you to buy a purchase without visiting a payment processor or cash register. For example:
- 65 percent are skeptical voice-activated payments – such as buying something through an AI assistant – are a safe way to pay.
- 57 percent are unsure about how safe their payment information would be if they visited checkout-free stores.
- Just 34 percent would allow their personal appliances, such as their refrigerators, automatically reorder goods.
Many consumers express interest in using contactless payments, but not very many use payment apps on a regular basis. According to PaySafe:
- Just 3 percent of consumers said they’d recently used a payment app, such as Apple Pay or Google Pay.
- Around 40 percent said they’d tried it at least once in 2017.
Analysts at PaySafe say that it could take some time for consumers to become more comfortable with contactless payments.
“Although it is early in the development of contactless infrastructure in the U.S., it is still surprising to see that only 3 percent of Americans have used it in the past month, considering how many had tried it last year,” said Paysafe CEO Todd Linden in a statement.
“These findings suggest many consumers aren’t ready to lose visibility of the payment process,” he added.
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: June 6, 2018|