Rate survey: Credit card interest rates jump to 15.13 percent

Interest rates on new credit card offers rose Wednesday for the fifth consecutive week, according to the CreditCards.com Weekly Credit Card Rate Report.

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Several issuers raised interest rates by 0.25 percent this week. As a result, the national average annual percentage rate rose to 15.13 percent -- a four-year high. The last time average rates were this high was in January 2012, when the national average began the year at 15.14 percent. Since then, average rates have mostly hovered between 14.9 and 15.09 percent.

This week's changes are largely due to the Federal Reserve's December 2015 rate hike. After the Fed increased the federal funds rate by 0.25 percent, most large issuers passed on that increase to cardholders. Since December, U.S. Bank, Wells Fargo, American Express, Bank of America, Citi, Capital One and Discover have all increased APRs on new card offers.

Interest rates will continue to go up
Interest rates on new card offers are likely to keep on rising this year as more card issuers respond to future Federal Reserve rate increases.

Among the largest issuers, Chase is the only one that hasn't yet matched the Fed's rate increase by increasing rates on new card offers. Other issuers that have so far chosen to leave rates alone include Barclaycard, PNC, SunTrust and Fifth Third Bank. Many store cards also retained the same APRs.

Analysts widely expect the Federal Reserve will increase the federal funds rate at least a few more times before the end of 2016, most likely resulting in more card APR hikes.

The interest rate increases will continue to be small. The Federal Reserve expects to keep rates relatively low and will only increase rates at a gradual pace. However, the increases could still have a significant impact on the total amount of interest cardholders will be expected to pay on card balances.

In projections released last month, most members of the Federal Reserve's rate-setting committee expected to raise rates by at least 1 percent by the end of 2016.

That, in turn, could push average rates on new card offers into brand-new territory. Average rates are already near record highs. In late 2011, the average APR briefly rose to 15.22 percent -- the highest average interest rate that CreditCards.com has recorded since it began tracking rates in mid-2007 -- before dropping to just under 15 percent the following month. The national average APR has remained near 15 percent ever since.

CreditCards.com's Weekly Rate Report
  Avg. APR Last week 6 months ago
National average 15.13% 15.07%
Low interest 11.84%
11.76% 11.62%
Cash back 15.41%
Balance transfer 14.23%
Business 13.07%
Student 13.42%
Airline 15.06%
Reward  15.26%
Instant approval 18.00%
Bad credit 22.84%
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: Jan. 6, 2016

See related: What will an interest rate hike cost?, Quarter-point interest rate calculator

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Updated: 03-21-2019