Rate survey: Average card APR climbs to record high of 16.11 percent

Despite rising rates, consumers continue to apply for new cards at a relatively fast clip

The national average APR for new credit cards smashed another record this week, according to the CreditCards.com Weekly Credit Card Rate Report.

The average card APR climbed to an all-time high of 16.11 percent, after several card issuers hiked rates.

Capital One drove much of this week’s rate increase by hiking the APR on its Journey Student Rewards card by 4 percentage points. Students are now offered a single APR of 24.99 percent, which is the highest APR of any student card that CreditCards.com tracks.

Credit One and TD Bank also helped boost the average card APR by increasing rates by a quarter of a percent.

In addition, Citi added a range of APRs to the CitiBusiness Aadvantage Platinum Select card, increasing the card’s maximum rate to 24.74 percent. However, the card’s minimum APR of 16.74 percent was left unchanged.

New card accounts continue to climb
The average card APR for new credit card offers has climbed by nearly a full percentage point since last year. But despite rising rates, consumers are continuing to apply for and open new cards at a relatively fast clip.  

According to the American Bankers Association’s July 2017 Credit Card Market Monitor, the total number of new accounts opened in the past two years grew by 8.8 percent this year. “The credit card market continued to expand in the first quarter despite disappointing GDP growth and sluggish consumer spending,” the ABA said in the report.

Credit card accounts belonging to cardholders with subprime credit scores grew at the fastest rate, the trade group found. However, lenders don’t appear to be nearly as eager to approve cards for consumers with low scores as they were in previous months.

The growth rate for cards belonging to consumers with low scores has slowed down since the end of last year, the trade group found. For example, new cards granted to cardholders with subprime scores grew by just 11 percent, year-over-year, in the first quarter of 2017. In the third quarter of 2016, by contrast, new subprime card accounts expanded by 19 percent, year over year. In the fourth quarter, subprime accounts jumped by 16 percent.

Cardholders with stronger scores are also opening new credit cards at higher rates than they did a year ago. For example, new card accounts belonging to consumers with excellent credit grew by 8 percent, year-over-year, in the first quarter of 2017. Most new cards opened over the past two years belong to cardholders with good to excellent credit.

Card spending softens
Despite opening new cards at a higher rate, consumers are cutting back the total amount they charge. According to the American Bankers Association, total card spending fell somewhat between the fourth quarter of 2016 and the first quarter of 2017 -- in part because of holiday-related spikes in spending. Total consumer spending also fell in the first quarter of 2017, affecting credit card purchase volumes.

Credit card spending usually declines in the first quarter after cardholders pull back on spending after the holidays. “But the decline was more pronounced this year than in 2016,” said the American Bankers Association, as consumers cut back on their overall spending.

CreditCards.com's Weekly Rate Report
  Avg. APR Last week 6 months ago
National average 16.11% 16.06%
Low interest 12.84%
12.83% 12.22%
Cash back 16.34%
Balance transfer 15.34%
Business 13.68%
Student 15.64%
Airline 16.06%
Reward  16.20%
Instant approval 18.55%
Bad credit 23.46%
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: July 26, 2017

See related: Rejection of new card applications rises, N.Y. Fed survey shows, DIY credit card arbitration: You may be able to opt out

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Updated: 02-18-2019