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Rate survey: Average card APR inches up to 15.18 percent

Summary

June15, 2016: The average credit card interest rate ticked up this week, according to the CreditCards.com Weekly Credit Card Rate Report.

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

The national average annual percentage rate (APR) rose to 15.18 percent Wednesday after falling the previous week for the first time in nearly four months.

Wells Fargo spurred this week’s rate change by replacing its standard cash back card with the new Wells Fargo Cash Wise credit card. The Cash Wise card contains a slightly higher minimum APR than the Wells Fargo Cash Back credit card and a somewhat lower maximum. Consumers applying for a Wells Fargo cash back card are now offered an APR range starting at 13.24 percent and maxing out at 25.24 percent.

The retooled cash back card also offers more cash back than its predecessor. The new Cash Wise card now offers unlimited 1.5 percent cash back on every purchase.

Issuers brace for more missed payments
Credit card holders have been paying off their credit cards swiftly in recent years, causing credit card delinquencies – late payments by 30 days or more – to fall to record lows. But as more cardholders with lower credit scores are approved for new cards, the historically low delinquency rates that issuers have enjoyed over the past several years may finally be coming to an end.

According to fresh reports from card issuers and credit rating agencies, the number of cardholders falling behind on payments is on the rise.

The credit rating agencies S&P and Experian reported in May that missed payments on bank-issued credit cards rose for the fourth month in a row in April.

Meanwhile, card issuer Synchrony Financial reported June 14 that it expected missed payments on Synchrony-issued credit cards to rise significantly as more of its cardholders struggle to pay their bills.

Many of the cards issued by Synchrony Financial are store cards, which tend to be issued to cardholders with lower credit scores. But analysts say that if store cardholders are having a hard time paying their bills, other consumers may also be feeling too financially stretched to make their payments.

Credit rating agency Fitch predicted in May that late card payments would increase as more cardholders with lower scores get approved for new cards.

Card issuers have been slowly loosening their requirements for new credit cards for several years, allowing more consumers with subprime credit scores to be approved. But until recently, late payments continued to drop, defying experts’ predictions that delinquencies would rise as more subprime cardholders opened new accounts.

Now, the number of subprime cards being approved is accelerating, which may be why missed payments are starting to rise. According to the American Bankers Association’s latest Credit Card Market Monitor, card issuers opened 30 percent more subprime credit card accounts in the third quarter of 2015 than the year before.

CreditCards.com’s Weekly Rate Report
Avg. APRLast week 6 months ago
National average15.18%15.17%14.98%
Low interest11.98%11.96%11.66%
Cash back15.32%15.30%15.26%
Balance transfer14.38%14.37%14.08%
Business13.12%13.12%12.85%
Student13.42%13.42%13.14%
Airline15.08%15.08%14.91%
Reward15.29%15.28%15.11%
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 15, 2016

See related:9 signs you have too much debt, Free credit scores now easier to get

What’s up next?

In Rate Report

Rate survey: Average card APR falls to 15.17 percent

After remaining at 15.19 percent for seven weeks, the national average annual percentage rate slid to 15.17 percent

Published: June 8, 2016

See more stories
Credit Card Rate Report Updated: September 18th, 2019
Business
15.45%
Airline
17.38%
Cash Back
17.52%
Reward
17.39%
Student
17.58%

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