Rate survey: Average card APR remains at record high of 16.13 percent

Personal finance writer
Specializing in new trends in credit

The average credit card rate remained at a record high this week, according to the CreditCards.com Weekly Credit Card Rate Report.

The average 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. Introductory (teaser) rates are not included in the calculation.

For the second consecutive week, the national average APR clocked in at 16.13 percent.

Most issuers left card rates unchanged. Two cards included in the weekly rate report increased rates by a quarter of a percent in response to the Federal Reserve’s June 2017 rate change. But the changes were too small to affect the national average.

The national average is now almost a full point higher than it was a year ago. On Aug. 9, 2016, the average APR registered at just 15.18 percent, which at the time was close to a record high. Between 2011 and 2016, average card rates stayed within close rounding distance of 15 percent, before rising by more three quarters of a percent in 2017.

Despite higher rates, consumers pack on card debt
Consumers are paying more, on average, to carry a credit card balance than they have in years. According to the Federal Reserve, the average APR for consumers who carry a balance has risen to 14 percent – up from 13.35 percent in May 2016.

Meanwhile, CreditCards.com data shows that the average median APR for new credit card accounts has grown to 19.74 percent as a growing number of card issuers introduce wider APR ranges to accommodate more customers. The average maximum APR has also climbed significantly this year, rising to 23.34 percent – just 0.12 percent shy of the average APR for cards that are reserved solely for consumers with bad credit.

The higher rates on new and current card accounts aren’t deterring consumers from embracing higher balances, however. According to Federal Reserve’s report on consumer credit, issued Monday, consumer credit card balances swelled by 4.9 percent in June, causing the total amount of credit card debt to hit an all-time high.

According to the Federal Reserve, consumers owe roughly $1.021 trillion on their cards – up from around $980.7 billion in the third quarter of 2016.

That surpassed the previous record, set in April 2008, just before the Great Recession, when consumers owed around $1.02 trillion in credit card debt.

June marked the fifth consecutive month that card balances rose, indicating that consumers have grown more comfortable with bigger balances. In May, card balances expanded by 6.9 percent.

As card balances rise, missed payments are becoming slightly more common.

However, banks are starting to cut back on the number of subprime card applications they approve, which could slow down the rise in delinquencies. According to the Federal Reserve’s latest Senior Loan Officer survey, a significant number of banks report they have recently tightened lending standards for credit cards, especially for subprime card applicants.

See related: Rejection of credit card applications rise, N.Y. Fed survey shows, Student card survey 2017: Offers, terms become more generic