Rate survey: Average card APR stays at record 16.14%
For the second week in a row, the national average APR remained at a record high of 16.14 percent – nearly a full percentage point higher than it was last year. On August 23, 2016, the average weekly APR was just 15.19 percent.
The average card APR has climbed steadily this year, thanks to periodic quarter-point rate bumps by the Federal Reserve. When the Fed changes its benchmark interest rate, most variable rate cards match it by the same amount. As a result, the average APR for the year has risen to 15.75 percent – also a record high
Most card APRs remained unchanged this week. One store card increased its APR by 0.25 percent, but the change didn’t affect the national average.
Despite higher rates, cardholder happiness has
Consumers are happier with their credit cards than they’ve been in years. According to J.D. Power’s latest Credit Card Satisfaction Study, cardholder contentment is at its highest point since J.D. Power began evaluating credit card satisfaction in late 2007.
Consumers who carry a balance are paying more to own a new card than they used to, and card rates are up across every category, including cash back and travel cards. The average APR for a cash back credit card, for example, has climbed from 15.32 percent in August 2016 to 16.37 percent in August 2017. Meanwhile, the average APR for airline cards has jumped from 15.13 percent to a record 16.06 percent.
Promotional offers are also somewhat less generous. For example, research released by the financial services company Credit Suisse shows that the average balance transfer period has hovered between 14 and 15 months for nearly three years. Before 2015, the average balance transfer period regularly climbed as high as 16 to 20 months.
But the higher rates and more conservative promotional offers aren’t deterring cardholders from applying for new cards. According to the credit rating agency TransUnion, more people now own at least one card than at any other time since 2005.
According to J.D. Power and Associates, people may be happier with their cards in part because rewards offers have become so lucrative. As competition for new cardholders continues to surge, card issuers have tacked on bigger sign-up bonuses and introduced increasingly generous rewards programs. As a result, cardholders who regularly use their credit cards can potentially earn hundreds of dollars worth of rewards just by using credit to pay for goods and services instead of cash or debit.
“It’s a really good time to be a credit card customer,” J.D. Power’s Jim Miller said in a news release. “Overall satisfaction is up across the board, and growing numbers of card companies and regional banks are coming to the market with new products that offer rich sign-up bonuses, increased cash back rewards and new benefits.”
People are particularly happy with their cash back cards, J.D. Power found. According to the survey, cash back cards earned the highest ratings from current card customers. Airline cards and store credit cards, by contrast, received some of the lowest favorability ratings.
Consumers’ dissatisfaction with airline cards may be due, in part, to weakening rewards programs. Airlines frequently slash the value of their airline miles and make it tough to book a rewards-funded ticket by imposing travel blackout dates.
|CreditCards.com's Weekly Rate Report|
|Avg. APR||Last week||6 months ago|
|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.)|
|Updated: August 23, 2017|
- Rate survey: Average card APR breaks new record, climbing to 16.81 percent – June 20, 2018: The average credit card interest rate soared to another 10-year high this week after the Federal Reserve increased its benchmark interest rate by a quarter of a percent ...
- Rate survey: Average card APR remains at record high of 16.75 percent – June 13, 2018: The average credit card interest rate held steady this week, according to the CreditCards.com Weekly Credit Card Rate Report ...
- Rate survey: Average card APR breaks new record, climbing to 16.75 percent – June 7, 2018 The average credit card interest rate sailed to another record high this week, according to the CreditCards.com Weekly Credit Card Rate Report ...