Rate survey: Average card APR remains at 17.14 percent for fourth week

Kelly Dilworth
Personal finance writer
Specializing in new trends in credit

CreditCards.com Weekly Credit Card Rate Report

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Interest rates on new credit card offers remained unchanged this week, according to the CreditCards.com Weekly Credit Card Rate Report. None of the cards included in the weekly average advertised new interest rates. As a result, the average card APR remained at a record high of 17.14 percent for the fourth consecutive week. 

Issuers also left promotional rates unchanged. Every week, CreditCards.com evaluates the APRs, annual fees and promotional terms of 100 U.S. credit cards.

After increasing rates in line with the Federal Reserve’s September 2018 quarter-point rate hike, most card issuers have opted to leave credit card terms alone – for now. 

However, interest rates are likely to rise again by the end of this year. The Fed is widely expected to raise its benchmark interest rate after its December 2018 policy meeting. If that happens, most variable rate loans, including credit cards, will eventually increase rates by the same amount. 

The average card APR is already at its highest point since CreditCards.com began tracking rates in mid-2007. If the Fed increases rates by a 0.25 percent in December, the average card APR could run as high as 17.39 percent or more by early 2019. 

Federal policymakers have signaled that they plan to continue raising rates throughout the next year. As a result, average credit card interest rates could also come near 18 percent before 2020. 

But the Fed may pause the rate hikes if the economic indicators it uses to decide its rate setting policy begin to shift. Already, the Fed is coming under pressure from some quarters to cool down its rate hikes, which are increasing costs for consumers and businesses. 

See related: Historic credit card interest rates chart

Despite higher rates, consumers are increasingly relying on credit

The higher rates don’t appear to be affecting consumers’ payment choices this holiday season, though. 

According to a recent survey of credit union members, for example, many consumers are increasingly reaching for their credit cards, rather than cash or debit, when making purchases. In a survey of 1,000 credit union members and 500 bank customers, 61 percent of respondents said they preferred to use credit cards when making payments. Meanwhile, 60 percent said credit cards were easier and more user-friendly than other payment methods.

Consumers who want to use credit to help fund their holiday shopping or other purchases are also having an easier time gaining access to credit. According to new research from TransUnion, banks are loosening their restrictions somewhat and making it a little easier to qualify for a credit card. 

As a result, more consumers are opening new card accounts. According to TransUnion’s latest Industry Insights Report, credit card originations – which measure the total number of new accounts that consumers opened – grew by 2.1 percent in the third quarter of 2018. 

Many of the consumers who opened new accounts have excellent credit. But those with less-than-ideal scores also opened up a larger number of accounts, TransUnion found, thanks in part to more flexible lenders. 

Banks had previously been much more restrictive with their lending requirements and were opening fewer accounts for consumers with less-than-perfect credit scores. However, they appear to have reversed that trend – at least somewhat – as they open their doors to a wider range of customers. 

“In 2016, the market experienced a pullback as lenders slowed or stalled subprime originations,” said TransUnion’s Matt Komos in a news release. However, “the pendulum is starting to swing back, as we see lenders once again extend credit to subprime consumers. In this environment, lenders are continuing to focus on risk tolerance and are taking this into consideration as some of them are shortening loan terms, managing interest rates and lowering loan amounts or credit lines.” 

CreditCards.com's Weekly Rate Report

  Avg. APR Last week 6 months ago
National average 17.14% 17.14%
16.73%
Low interest 14.23%
14.23% 13.58%
Cash back 17.21%
17.21%
16.99%
Balance transfer 16.32%
16.32%
15.96%
Business 14.78%
14.78%
14.34%
Student 17.20%
17.20%
16.26%
Airline 17.12%
17.12%
16.66%
Rewards 17.13%
17.13%
16.81%
Instant approval 19.83%
19.83%
19.05%
Bad credit 24.34%
24.34%
23.77%
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. 28, 2018


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Updated: 12-15-2018