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Rate Report

Rate survey: Average card rate climbs to all-time high of 16.92 percent

Kelly Dilworth
Personal finance writer
Specializing in new trends in credit

CreditCards.com Weekly Credit Card Rate Report

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The average credit card interest rate set another record this week, climbing to 16.92 percent.

Several major card issuers increased card APRs, including Bank of America, Barclaycard, Discover, USAA and Capital One, according to the CreditCards.com Weekly Credit Card Rate Report. As a result, the national average APR soared to its highest point since CreditCards.com began tracking rates in mid-2007.

CreditCards.com evaluated the APRs, promotional terms and annual fees of 100 U.S. credit cards. Among the 100 cards tracked by CreditCards.com, 38 advertised new rates.

Most of the issuers that increased rates this week hiked APRs by 0.25 percent, matching the Federal Reserve’s June 2018 rate change. When the Fed revises its benchmark interest rate, the federal funds rate, most U.S. credit cards tied to the U.S. Prime Rate eventually alter rates by the same amount.

The sporting goods store Cabela’s also increased the APR on its store card, the Cabela’s Club Visa, after a change in the one-month Libor rate. Unlike most U.S. credit cards, the Cabela’s card is tied to the Libor rate rather than the prime rate. Cardholders are now offered an APR range starting at 17.08 percent and maxing out at 26.08 percent.

In addition, Chase and the hotel chain Hyatt rebranded the duo’s premium hotel rewards card and increased the card’s annual fee to $95 – up from $75.

The Hyatt credit card is now marketed as the World of Hyatt Credit Card and offers an enhanced suite of benefits, including a higher rewards rate on hotel purchases and more ways to earn bonuses. For example, cardholders are now offered 4 bonus points on Hyatt hotel purchases – up from 3 bonus points. In addition, cardholders can earn 2 bonus points on restaurants, airfare, ground transportation and gym memberships.

Rising card APRs unlikely to wind down anytime soon

The Federal Reserve is facing calls from some analysts to slow its interest rate hikes, which are causing consumers’ rates to rise on everything from credit cards to personal loans and mortgages. However, the Fed is showing no signs of backing down.

The Fed is scheduled to release minutes from its June 2018 meeting on July 5. Shortly after that meeting, projections released by the Fed showed that it’s likely to raise rates as many as two more times before the end of the year, causing borrowers’ rates to increase by at least half a percent.

Additional quarter-point rate increases could cost some borrowers hundreds of dollars in additional interest, depending on how aggressively they tackle their monthly balances.

Interest rates have risen sharply this year, causing many cardholders’ balances to noticeably increase. Since July 2017, for example, the average card APR has increased by nearly a full percentage point.

The average card APR for the first half of 2018 is currently 16.57 percent – up from 15.66 percent a year ago.

By the end of 2017, the average card APR for the year settled at 15.89 percent. If the Fed increases rates by another half a percent by mid-December, the average card APR for 2018 could settle around 17 percent.

Meanwhile, the average card APR at the beginning of 2019 could come within rounding distance of 18 percent for the first time on record – a huge increase from recent years when the average card APR remained within rounding distance of 15 percent for several consecutive years. 

See related: First-time cardholder? Avoid these 5 common credit card mistakes, Historical credit card rates, 2007-2018

CreditCards.com’s Weekly Rate Report

 Avg. APR Last week 6 months ago
National average16.92%16.83%16.32%
Low interest13.82%13.72%13.07%
Cash back17.15%17.04%16.55%
Balance transfer16.17%16.06%15.55%
Business14.53%14.43%13.87%
Student16.48%16.35%15.92%
Airline16.84%16.74%16.25%
Rewards16.99%16.90%16.40%
Instant approval19.20%19.05%18.74%
Bad credit23.90%23.84%23.59%
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: July 5, 2018

 

 

What’s up next?

In Rate Report

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

June 27, 2018: 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

Published: June 27, 2018

See more stories
Credit Card Rate Report Updated: May 23rd, 2019
Business
15.61%
Airline
17.50%
Cash Back
17.60%
Reward
17.62%
Student
17.79%

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