Rate survey: Average card APR jumps again to record 15.71 percent

Kelly Dilworth
Personal Finance Writer
Specializing in new trends in credit

 

The national average APR on new card offers climbed to another all time high this week, according to the CreditCards.com Weekly Credit Card Rate Report.

For the first time on record, the national average APR reached 15.71 percent. Before this year, the highest average APR CreditCards.com recorded was 15.29 percent in December 2016. The average card APR for 2016 was 15.18 percent.

Several card issuers boosted rates by a quarter of a percent this week in order to match the Federal Reserve’s March 2017 rate change. Bank of America, Discover, Capital One, Barclaycard and several regional banks, including SunTrust and Regions, increased rates on most card offers by 0.25 percent.

The retail store Cabela’s also increased the APR on the Cabela’s Club Visa by 0.20 percent. Unlike most U.S. credit cards, the Cabela’s card is tied to the Libor rate rather than the U.S. prime rate.

More cardholders rolling over debt
Despite higher credit card interest rates, a growing number of households are carrying credit card balances and rolling over their balances from month-to-month.

According to a new poll from the National Foundation for Credit Counseling and Boeing Employees Credit Union, 39 percent of U.S. adults carry over credit card debt from month to month – up from 35 percent in 2016. Meanwhile, 16 percent carry over at least $2,500 or more in debt.

The uptick in cardholders carrying balances could make it harder for some families to absorb the Federal Reserve’s rate increases, said the NFCC in a news release. “Interest rate increases related to the recent Federal Reserve announcement will likely add to the cost of carrying credit card debt, which could increase financial pressures on families who are unable to find extra room in their budget to offset the impact of these changes.”

The Federal Reserve is expected to modestly increase rates at least two more times before the end of the year. Federal Reserve policymakers have said it’s possible the federal agency will increase rates as many as three times over the next year.

Already, cardholders who own cards with APRs close to the national average and carry at least $2,500 in debt could wind up paying up to $130 or more in interest charges if they take a year to clear their balances, according to CreditCards.com’s payoff calculator.

Cardholders who can only afford to pay the minimum amount due could have an even harder time absorbing additional rate increases. For example, a cardholder with a 15.71 percent APR and at least $2,500 in debt would owe more than $1,559 in interest if he or she only paid the minimum amount due.

According to the NFCC and BECU poll, 7 percent of cardholders confess they’ve already fallen behind on at least one credit card bill. Meanwhile, 8 percent admit that they’ve been rejected for a new card.

Some consumers have also tamped down their overall spending, the survey found, which could indicate that they are already having a harder time managing their household expenses and are trying to cut back. For example, 26 percent of adults said they are spending less this year than they did the year before – up from 23 percent in 2016.

“As more households carry costly credit card debt from month to month, spending could become a greater challenge as Americans try to pay off balances while working against a rising tide of interest and fees,” said the NFCC in the release.

CreditCards.com's Weekly Rate Report
  Avg. APR Last week 6 months ago
National average 15.71% 15.63%
15.22%
Low interest 12.56%
12.47% 11.98%
Cash back 15.76%
15.66%
15.32%
Balance transfer 14.89%
14.89%
14.39%
Business 13.62%
13.49%
13.12%
Student 13.92%
13.79%
13.42%
Airline 15.73%
15.62%
15.13%
Reward  15.79%
15.70%
15.30%
Instant approval 18.23%
18.11%
18.04%
Bad credit 23.20%
23.17%
22.86%
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: April 5, 2017

See related: What interest rate increases will cost cardholders, Card APRs will rise quickly after Fed rate hikes


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Updated: 11-17-2017