October 3, 2018: The average credit card interest rate climbed past 17 percent Wednesday for the first time since August, according to the CreditCards.com Weekly Credit Card Rate Report.
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One week after the Federal Reserve increased its benchmark interest rate by a quarter of a percent, dozens of cards included in the weekly rate report advertised higher interest rates. As a result, the national average minimum APR climbed to 17.01 percent – up from a previous weekly average of 16.92 percent.
Maximum credit card interest rates – which are the highest rates cardholders are offered – also climbed significantly this week. According to CreditCards.com data, the average maximum card APR rose to 24.39 percent – a big change from previous years when issuers issuers typically capped interest rates close to or below 20 percent.
Now, even cardholders with fairly good credit scores are being offered rates well above 20 percent. The average median card APR – which is closer to what many cardholders are paying – is currently at 20.70 percent.
See related: Historic credit card interest rates
The average card APR has just started its latest ascent
Average card rates are almost certain to keep climbing in the coming weeks as more credit card issuers match the Federal Reserve’s September 2018 rate change.
When the Federal Reserve revises its benchmark interest rate, most variable rate cards follow suit. According to CreditCards.com research, only a fraction of major issuers have so far matched the Fed’s latest rate hike.
For example, CreditCards.com evaluated the APRs, annual fees and promotional terms of 100 U.S. credit cards this week. Among those hundred cards, just 40 increased rates by a quarter of a percent. Issuers that hiked rates within a week of the Fed’s latest rate change include Bank of America, Discover, Wells Fargo, American Express and U.S. Bank.
Other major issuers, such as Chase and Capital One, are expected to hike rates soon.
Once they do, the average card APR could potentially rise as high as 17.17 percent or more. Meanwhile, the average maximum interest rate could come within rounding distance of 25 percent – a significant milestone for general market cards.
Even consumers with excellent credit could see high APRs
In previous years, an APR of 25 percent or more was typically reserved for cardholders with exceptionally low scores. However, many cards that are marketed to consumers with excellent credit now advertise maximum rates above 25 percent.
For example, among the cards that hiked rates this week, several cards saw their maximum APRs break past 25 percent for the first time.
Bank of America’s signature cash back card, the Bank of America Cash Rewards credit card, now caps interest rates at 25.24 percent – up from a previous high of 24.99 percent. So do other Bank of America rewards cards, such as the World Wildlife Fund card and the MLB Cash Rewards Mastercard from Bank of America.
Meanwhile, maximum interest rates on several American Express and Wells Fargo cards climbed even higher this week, rising near or above 26 percent.
The maximum APR on the Wells Fargo Rewards card, for example, now runs as high as 27.99 percent, while the highest available rate on the Wells Fargo Cash Wise Visa Card now maxes out at 26.99 percent.
American Express – which has earned a reputation for catering to cardholders with excellent credit – also charges notably high rates these days. For example, two of American Express’ most popular everyday spending cards – the Amex Everyday® Credit Card from American Express and the Blue Cash Everyday® Card from American Express – now cap rates at 25.99 percent.
Maximum rates on American Express’ line of airline and hotel cards are even higher. For example, the maximum APR on the popular Starwood Preferred Guest® Credit Card from American Express – which is designed for affluent cardholders who prefer to stay in upscale hotels – now runs as high as 26.74 percent. APRs on other American Express travel cards, such as the Platinum Delta SkyMiles Credit Card from American Express and the Hilton Honors American Express Card, also max out just below 27 percent.
Cardholders hoping for lower rates are unlikely to get relief any time soon. The Federal Reserve has signaled that it will keep hiking rates over the next year. Meanwhile, card issuers have shown little appetite for lowering rates by a significant amount. The average card APR has fallen just once since Jan. 1.
If card rates keep climbing as they’ve done over the past year, even cardholders with excellent credit could soon struggle to qualify for cards with rates well below 17 percent.
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: Oct. 3, 2018|