Rate survey: Average card rate falls to 16.91 percent
The average credit card interest rate dropped below 17 percent Wednesday for the first time in almost a month. The national average APR slipped to 16.91 percent after two cards included in the CreditCards.com Weekly Rate Report ceased advertising online.
When a card is discontinued or taken offline, CreditCards.com replaces that card in the database with a card that offers similar rewards or other features. For example, the oil company Shell is no longer advertising the Shell Platinum MasterCard to online visitors. So CreditCards.com replaced it in the database with another card that offers gas rewards, the Wells Fargo Propel American Express® Card.
The Propel card, which offers 3 points for every dollar you spend on gas, charges a substantially lower APR than the Shell Platinum MasterCard, and so the change helped drag down the national average.
Similarly, Citi has temporarily removed the Citi Prestige card from its online offerings. CreditCards.com replaced it in the database with another high-fee, super premium credit card, the U.S. Bank Altitude Reserve Visa Infinite Card.
None of the other cards included in the database advertised new offers. Every week, CreditCards.com evaluates the APRs, annual fees and promotional rates of 100 U.S. credit cards.
The APRs on most of the cards included in the database have increased significantly over the past year, thanks in part to steady rate increases by the Federal Reserve. When the Fed increases interest rates, most variable rate loan hike rates by the same amount. As a result, the average card APR has climbed by nearly a full point in just the last year.
Issuers have been much more reluctant to trim interest rates. For example, this week marks the first week since 2017 that the average card APR has declined. Rate cuts have been so rare, in fact, that most of the cards included in the weekly rate report haven’t sustained a cut to their lowest available interest rate in years.
As a result, cardholders hoping for a reprieve are unlikely to get one anytime soon. Rather than compete on pricing, most issuers are instead competing with one another with more generous rewards and other perks.
See related: Historic credit card interest rates chart
Disappearance of the Citi Prestige card surprises rewards hunters
Rewards fans may have a harder time finding as generous a card as they’ve found in recent years, though – particularly now that one of the most infamous high value rewards cards has gone offline.
Late last week, Citi pulled the Citi Prestige card from its website and closed the card for new applications. In a statement to The Points Guy, Citi confirmed that it had taken temporarily the card off the web.
However, Citi hasn’t shuttered the card completely. According to a Citi spokesperson, the company plans to revamp the card before re-launching it sometime later in the year.
“Our go-to marketing strategy continues to evolve to feature different products and offers,” the spokesperson said. “We remain committed to the Prestige product and servicing our valued existing cardmembers. We look forward to reintroducing the card for new cardmembers in the near future.”
It’s not clear why the Citi Prestige card was pulled from the market. However, analysts have predicted for some time that card issuers would need to rethink their rewards programs, which, in some cases, are so generous they are dragging down issuers’ profits.
Generous rewards programs may not go away, but they will change
Brian Riley, an analyst at Mercator Advisory Group, has argued some super premium rewards programs are so lucrative for cardholders that they are unsustainable.
“The biggest challenge is not rewards, it is that profitability is floundering,” Riley wrote in an Aug. 28 blog post.
Some issuers that have become famous for their ultra generous rewards programs, such as Chase, have reported significant income losses due to the programs’ expenses.
Before it went offline, the Citi Prestige card was one of the most generous cards on the market. For example, it offered a coveted fourth-night-free hotel benefit – which could be used at any hotel you choose – that allowed frequent travelers to save hundreds of dollars a year on travel costs. It also offered a host of other super generous card perks, such as a $250 air travel credit, an application fee credit for Global Entry and more.
Analysts such as Riley warn that credit card perks will have to evolve as card issuers figure out how to recover their profits, while still attracting new cardholders. Already, card issuers have trimmed travel benefits and other perks in an effort to control costs.
The upshot for consumers: Don’t expect the rewards programs you see today to last forever. “For now, get rewards while you can,” wrote Riley in his blog post. “We think you’ll see some across the board changes pretty soon.”
The temporary loss of the Citi Prestige card may or may not be a harbinger of things to come; but it’s almost certain that card rewards program will change at least somewhat over the next year as issuers rethink their programs.
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 29, 2018|
- Rate survey: Average card rate remains at 16.92 percent for third week – September 19, 2018: The average credit card interest rate held steady Wednesday, according to the CreditCards.com Weekly Credit Card Rate Report ...
- Rate survey: Average card rate stays put at 16.92 percent – September 12, 2018: The average credit card interest rate didn’t budge Wednesday, according to the CreditCards.com Weekly Credit Card Rate Report ...
- Rate survey: Average card rate rises to 16.92 percent – September 5, 2018: The average credit card interest rate inched up Wednesday, according to the CreditCards.com Weekly Credit Card Rate Report ...