Rate survey: Average card APR remains at 15.79% for second week

By  |  Published: May 17, 2017

Kelly Dilworth
Personal Finance Writer
Specializing in new trends in credit

 

The national average APR for new card offers remained near record highs Wednesday, according to the CreditCards.com Weekly Credit Card Rate Report.

For the second week in a row, the national average remained at 15.79 percent – a near record. Earlier this month, the national average APR hit an all-time high of 15.80 percent.

Most card issuers left interest rates unchanged this week. U.S. Bank increased the maximum APR on the U.S. Bank Business Edge Cash Rewards card from 18.74 percent to 23.74 percent. However, the change didn’t affect the national average because CreditCards.com only considers a card’s lowest available interest rate when calculating average rates. U.S. Bank left the Business Edge Cash card’s minimum APR of 12.74 percent unchanged.

None of the card issuers altered promotional terms this week, including 0 percent balance transfer offers and introductory purchase rates.

When paying bills, consumers put personal loans first
As card rates increase and issuers approve more applicants with damaged credit scores, missed credit card payments are on the rise.

Though still rare by historical standards, late credit card payments by 90 days have increased significantly since last year, according to research released this month by the credit agency TransUnion. The delinquency rate rose from 1.50 percent in the first quarter of 2015 to 1.69 percent in 2017. In 2015, the delinquency rate was just 1.34 percent.

TransUnion says that missed payments on credit cards have become more common, in part, because consumers with lower credit scores are qualifying for new cards at higher rates. “The recent surge in subprime cards has contributed to an increase in the card delinquency rate,” said TransUnion’s Paul Siegfried in a statement.

But a new report released by TransUnion on May 17 also indicates that consumers who are struggling to make their payments are putting credit card bills on the back burner while they pay other types of bills.  

According to the report, consumers who are stretched thin by bill payments are choosing to pay personal loans first before they tackle other bills.

TransUnion says the latest trend in bill payments is a significant departure from previous years when consumers would prioritize auto loan payments and mortgages when deciding which bills to pay and which bills to let go.

“It is quite surprising that, for most struggling consumers, unsecured personal loan payments are prioritized over other prominent credit products such as mortgages and auto loans,” said TransUnion’s Ezra Becker in a news release.

In the past, consumers would pay their auto loans first, mortgages second and credit cards third, except during the Great Recession. As the housing crisis waged on in 2007 and 2008, consumers put their credit card payments ahead of their mortgage payments to protect their liquidity as their homes increasingly lost value.

Typically, however, credit card delinquency rates tend to be significantly higher than the delinquency rates on other types of loans. For example, the delinquency rate for credit cards that are late by 30 days or more was 3.65 percent in 2016. For personal loans it was 1.49 percent. For auto loans, it was 1.75 percent and 2.44 percent for mortgages.

TransUnion postulates that consumers are starting to put more emphasis on personal loans because they tend to be shorter-term and paying them first helps get them out of the way. “Personal loan borrowers may feel they can get a quick win with these loans even when they are struggling, and there is a clear, near-term end to the obligation – a ‘light at the end of the tunnel,’ in a sense,” said Becker in the release. “In contrast, auto loans and mortgages have much longer terms, and credit cards have no set end date. Finding an opportunity to pay a debt in full can be a powerful motivator for a struggling consumer.”

CreditCards.com's Weekly Rate Report
  Avg. APR Last week 6 months ago
National average 15.79% 15.79%
15.18%
Low interest 12.66%
12.66% 12.00%
Cash back 15.89%
15.89%
15.33%
Balance transfer 15.07%
15.07%
14.41%
Business 13.66%
13.66%
13.12%
Student 13.92%
13.92%
13.42%
Airline 15.77%
15.77%
15.13%
Reward  15.88%
15.88%
15.24%
Instant approval 18.30%
18.30%
17.86%
Bad credit 23.23%
23.23%
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: May 17, 2017

See related: Fed: Banks ease grip modestly on cards in first quarter of 2017, Fed: Card balances rose $1.9 billion in March


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Updated: 10-23-2017

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