Rate survey: Average card APR holds steady at 16.15 percent for ninth week

Kelly Dilworth
Personal finance writer
Specializing in new trends in credit

Interest rates on new credit card offers remained fixed at 16.15 percent Wednesday for the ninth consecutive week, according to the CreditCards.com Weekly Credit Card Rate Report.

None of the cards tracked by CreditCards.com advertised new interest rates. Promotional rates also stayed the same. 

The average card APR is currently at its highest point in more than a decade and shows no signs of declining any time soon. It has dipped just twice this year, indicating that issuers have little appetite for cutting rates.

As the Federal Reserve gradually increases its benchmark interest rate, card issuers are responding by also boosting card APRs. As a result, the average card APR is now almost a full percentage point higher than it was in November 2016.

Higher rates could lead to more missed bills

Interest rates are expected to keep rising over the next year as the Federal Reserve continues to slowly increase interest rates. The Fed has signaled that it will raise rates again at least several more times over the next year – possibly as soon as December.

That could pose a problem for credit card holders who are searching for cards with low interest rates or are struggling to repay the debts they currently owe. Each time the Federal Reserve increases its benchmark interest rate, most credit card issuers hike rates by the same amount on nearly all variable rate credit cards.  

Depending on how much a cardholder owes, even just a 1 percentage point increase in a card’s interest rate can add up to hundreds of dollars worth of extra interest. For example, a cardholder who owes $5,000 on a card that charges 16.15 percent and can only afford to pay the minimum amount due would owe more than $400 more in interest if the card’s APR increased to 17.15 percent.

So far, most credit card holders have managed to absorb the rate increases without falling behind on their bills. But as cardholders’ debt loads continue to increase, along with higher interest rates, late payments on credit cards could become more common.

As balances rise, more cardholders are becoming seriously delinquent

Already, new research released November 14 by the New York Federal Reserve shows a growing number of credit card holders are falling into serious delinquency and missing at least three bills in a row. The New York Fed found the 90-day delinquency rate rose from 4.4 percent of accounts in the second quarter of 2017 to 4.6 percent of accounts in the third quarter.

As New York Fed economists noted in an August 2017 blog post, the percentage of cardholders falling deeply behind on their bills has been trending upward over the past year, concerning analysts. The uptick in delinquencies is partially due to more people with lower scores obtaining cards. But credit card issuers have been conservative about how much credit they allow cardholders with low scores to borrow. That, in turn, has made it less likely that cardholders with low scores will fall behind.

Instead, cardholders with higher credit scores have been much more likely to be granted bigger credit lines. As credit lines for some cardholders increase, many are holding onto bigger balances, making small increases in rates much more consequential.

According to the New York Fed’s latest household debt and credit report, credit card balances grew substantially in the third quarter of 2017.

CreditCards.com's Weekly Rate Report
  Avg. APR Last week 6 months ago
National average 16.15% 16.15%
Low interest 12.89%
12.89% 12.66%
Cash back 16.40%
Balance transfer 15.38%
Business 13.68%
Student 15.70%
Airline 16.07%
Reward  16.24%
Instant approval 18.60%
Bad credit 23.46%
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: Nov. 15, 2017

See related: Historic credit card rates chart, Fed: Card balances passed $1 trillion in September

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Updated: 11-14-2018