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Rate survey: Average card APR climbs to a record high of 16.83 percent

Kelly Dilworth
Personal finance writer
Specializing in new trends in credit

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CreditCards.com Weekly Credit Card Rate Report

The average credit card interest rate smashed another record this week, climbing to 16.83 percent, according to the CreditCards.com Weekly Credit Card Rate Report. The average card APR is now almost a full percentage point higher than it was a year ago when it clocked in at 15.96 percent and nearly 2 percentage points higher than it was three years ago when it registered at just 15 percent. The difference in rates underscores just how sharply the average card APR has climbed in recent years.

To come to its findings, CreditCards.com reviewed the APRs, annual fees and promotional terms of 100 U.S. credit cards. Among the 100 cards included in the weekly rate survey, 11 advertised higher interest rates this week.

Rates are expected to keep climbing

The average card APR will likely rise again over the next several weeks as more card issuers match the Federal Reserve’s June 2018 rate change. When the Federal Reserve increases its benchmark interest rate, the federal funds rate, most card issuers eventually hike rates by the same amount.

Already, a number of major card issuers have matched the Federal Reserve’s latest rate hike, including Citi, American Express, U.S. Bank and Wells Fargo. Once more card issuers, such as Bank of America, Discover and Chase, join in and increase card APRs by a quarter of a percent, average card rates could potentially surpass 17 percent for the first time.

When that happens, it will represent a significant sea change in card APRs compared to 10 years ago when the average card APR was just 11.53 percent – a difference of nearly five and a half percentage points.

The Federal Reserve has projected that it will raise rates again before the end of the year – potentially by as much as .50 percent.

That could cost some cardholders with large balances hundreds of dollars in additional charges – especially if they only pay the minimum amount due.

Consumers step up use of credit cards and mobile payments

The higher rates aren’t stopping people from using their credit cards, though. According to a new survey released June 25 by the Federal Reserve Bank of Boston, people are increasingly choosing credit cards, rather than cash or debit, to make payments.

For example, more than 23 percent of all payments in 2017 were made on a credit card – up from around 21 percent in 2015.

Debit cards are still the most popular way to pay for goods and services. For example, nearly 32 percent of all payments were made with a debit card, while more than 27 percent were made with cash.

However, most consumers use a combination of payment methods, depending on the transaction. Just 12 percent of consumers went 100 percent cashless in 2017.

Most people prefer to use plastic cards or electronic transactions – such as checking account withdrawals – to pay bills and buy things online, the survey found.

Cash continues to be one of the most popular ways to pay for something in a store, but it may not be for long. Consumers paid for significantly more in-store transactions using some kind of plastic payment card in 2017 than they did using cash or checks. For example, 35 percent of in-store purchases were made with a debit, credit or prepaid card last year. Just 26 percent were made with cash or check.

See related: 5 mistakes you should avoid after paying off credit card debt, Historical credit card rates, 2007-2018

CreditCards.com’s Weekly Rate Report

Avg. APR Last week 6 months ago
National average16.83%16.81%16.24%
Low interest13.72%13.70%12.97%
Cash back17.04%17.01%16.46%
Balance transfer16.06%16.05%15.46%
Business14.43%14.41%13.78%
Student16.35%16.29%15.82%
Airline16.74%16.72%16.17%
Rewards16.90%16.87%16.32%
Instant approval19.05%19.05%18.62%
Bad credit23.84%23.80%23.55%
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 27, 2018

 

 

What’s up next?

In Rate Report

Rate survey: Average card APR breaks new record, climbing to 16.81 percent

June 20, 2018: The average credit card interest rate soared to another 10-year high this week after the Federal Reserve increased its benchmark interest rate by a quarter of a percent

Published: June 20, 2018

See more stories
Credit Card Rate Report Updated: July 17th, 2019
Business
15.61%
Airline
17.59%
Cash Back
17.68%
Reward
17.58%
Student
17.79%

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