Rate survey: Average card APR soars to record high of 16.21 percent

Kelly Dilworth
Personal finance writer
Specializing in new trends in credit

The average credit card interest rate jumped to a new record high this week, according to the CreditCards.com Weekly Credit Card Rate Report.

The national average APR hit 16.21 percent Wednesday, which is the highest APR CreditCards.com has recorded since it began tracking rates in mid-2007.

The Federal Reserve spurred this week’s rate change. The Fed announced Dec. 13 it was hiking its benchmark interest rate by another quarter of a percentage point, bringing the federal funds rate to a range of 1.25 to 1.50 percent.

Multiple card issuers immediately responded to the rate hike by boosting card APRs on new card offers by 0.25 percent. When the Federal Reserve alters its benchmark interest rate, lenders typically revise rates on their variable rate loans by the same amount.

Interest rates are expected to climb further over the next several weeks as more card issuers lift APRs by a quarter of a percent. Some lenders take several weeks after a Fed change to alter rates on new cards. 

Maximum card APRs inch closer to 30 percent
Cardholders with imperfect credit scores will feel the sharpest sting from the latest credit card rate hikes.

Among the 100 cards monitored by CreditCards.com, the average maximum card APR has climbed to 23.54 percent. That includes the maximum rate for cards that are marketed exclusively to cardholders with good to excellent credit.

The average minimum interest rate on cards that are marketed to consumers with bad credit, by comparison, is nearly identical: 23.52 percent.

According to CreditCards.com data, even cardholders with relatively good scores can get hit with rates well above 20 percent.

For example, several general-purpose credit cards marketed to consumers with good to excellent credit now boast maximum rates closer to 30 percent – a rate that’s typically associated with subprime cards and high interest retail store cards.

The Wells Fargo Rewards Visa card, for example, now advertises a maximum rate of 27.24 percent. Similarly, the Voice Rewards card from Huntington Bank also charges a maximum APR of 27.24 percent. Several American Express cards that boosted rates this week also charge maximum APRs above 25 percent. For example, the Gold Delta SkyMiles card now charges a maximum rate of 25.99 percent, while the Blue Cash Everyday card charges a maximum APR of 25.23 percent.

Those rates are notable, in part, because they are even higher than the average maximum rate for subprime credit cards. Among the 100 cards tracked by CreditCards.com, the average subprime card advertises a maximum rate of 24.52 percent. Meanwhile, the most expensive card tracked by CreditCards.com, the First Premier Bank credit card, charges a single rate of 36 percent.

TransUnion: Credit card delinquencies are likely to climb
As cardholders’ interest rates continue to increase, the minimum amount they owe on their credit card bills will also expand. That could make it tough for cardholders with large, revolving balances to stay on top of their bills.

According to TransUnion’s latest Consumer Credit Forecast, late payments on credit cards are likely to tick up in 2018 as more cardholders with stagnant wages and expanding credit card bills struggle to make payments.

“The largest driver for an increase in delinquencies on a macroeconomic level is the expected increase in the prime interest rate,” said TransUnion in a December 2017 news release.

Credit card balances are also expected to grow next year, said TransUnion, despite higher APRs for most cardholders. 

CreditCards.com's Weekly Rate Report
  Avg. APR Last week 6 months ago
National average 16.21% 16.14%
Low interest 12.95%
12.87% 12.73%
Cash back 16.43%
Balance transfer 15.44%
Business 13.76%
Student 15.76%
Airline 16.14%
Reward  16.29%
Instant approval 18.62%
Bad credit 23.52%
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: Dec. 20, 2017

See related: Historic credit card rates chart, Fed: Card balances surged by $8.3 billion in October

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Updated: 01-24-2019