August 1, 2018: The average credit card interest rate climbed to a record high Wednesday, according to the CreditCards.com Weekly Credit Card Rate Report
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Several cards tracked by CreditCards.com posted higher interest rates. As a result, the average credit card interest rate climbed to an all-time high of 16.99 percent, according to the CreditCards.com Weekly Credit Card Rate Report.
CreditCards.com evaluated the APRs, promotional terms and annual fees of 100 U.S. credit cards. Four of the cards included in the weekly rate report advertised new interest rates.
Three increased rates by a quarter of a percent, matching the Federal Reserve’s June 2018 rate hike.
One hiked APRs even further. The subprime lender Credit One increased the minimum APR on the Credit One Visa Platinum card from 17.49 percent to 19.74 percent – a more than 2-point difference. Meanwhile, it increased the card’s maximum APR by a quarter of a percent, bumping it to a high of 25.74 percent.
Historically high rates are squeezing cardholders’ pocketbooks
Interest rates on new card offers are now at historic highs, forcing many cardholders to pay significantly more to carry a balance. In August 2015, for example, the average minimum card APR was just 15 percent – nearly two points lower than it is now.
Meanwhile, cards with genuinely low interest rates have all but disappeared – especially at larger banks. Among the personal cards included in the weekly rate report, just one credit card – the Navy Federal Credit Union Platinum card – charges an APR below 11 percent. The average low interest credit card charges a minimum APR of 13.87 percent.
Maximum interest rates have also climbed precipitously. For example, CreditCards.com data shows the average maximum interest rate for all 100 cards included in the weekly rate report has climbed to 24.24 percent – a rate that was once reserved only for cardholders with the lowest credit scores.
Now, most of the cards included in the weekly rate report that are marketed as cards for consumers with excellent credit carry maximum rates well above 20 percent. Several cap rates at just over 24 percent, including the Citi Diamond Preferred card, the plain vanilla BankAmericard and the Capital One Quicksilver card.
Other cards, such as the American Express® Everyday card and the Chase Slate card, charge maximum rates above 25 percent.
Some general market credit cards, such as the Wells Fargo Rewards card, are even charging maximum rates as high as 27.74 percent – a rate that’s just slightly lower than the penalty rates charged by other issuers. For example, many cards charge penalty rates as high as 29.99 percent when cardholders repeatedly fall behind on payments.
The extra high rates underscore just how costly credit cards have become in recent years. Few cardholders are offered a card’s lowest available rate, say experts. Instead, many cardholders, including those with excellent credit, are offered a card’s median or maximum available interest rate. As a result, many new cardholders now are looking at rates closer to 20 percent. For example, among the 100 cards included in the weekly rate report, the average median interest rate has climbed to 20.62 percent.
That high of a rate can make carrying a balance extremely costly – especially if cardholders pay only the minimum amount due. For example, paying just the minimum amount due on a card with a 20.62 percent APR and a $3,000 balance would cost a borrower roughly $3,319 with interest – more than $300 above the original balance.
See related:Historical credit card rates, 2007-2018
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: August 1, 2018|