Rate survey: Average card APR climbs to 16.15 percent

The average APR for new credit card offers inched up to another record high Wednesday, according to the CreditCards.com Weekly Credit Card Rate Report.

The national average APR climbed to 16.15 percent, setting another all-time record. Interest rates on new card offers are currently at their highest point since CreditCards.com began tracking rates in mid-2007.

Citi helped spur this week’s rate change by boosting the lowest available APR on the Citi Diamond Preferred card from 13.49 percent to 13.99 percent. It also nudged the card’s maximum rate by half a percentage point, pushing it up to a high of 23.99 percent.

A change in the CreditCards.com database also affected this week’s rate change. Occasionally, CreditCards.com switches up the cards in the rate report’s 100-card sample. This week, CreditCards.com replaced a retail card with limited availability with another store card with a slightly higher APR.

More cardholders miss payments
As credit card balances rise, more borrowers are falling behind on paying their bills. According to Reuters, several banks reported this month that credit card borrowers were missing more payments. Capital One, J.P. Morgan Chase and Discover have all reported upticks in the number of credit card holders who are behind on card payments by 30 days or more.

According to research released last month by the New York Federal Reserve, the number of cardholders who are more than 90 days behind on paying at least the minimum amount due on their credit cards has also increased significantly in recent months, indicating possible financial distress.

Most cardholders who are seriously behind on paying their bills already had low credit scores and a history of missing bills. But the uptick in missed payments is significant, say economists, particularly since the job market is relatively strong.

“This growth is particularly concerning, particularly in the context of a strong economy and low interest rates,” wrote New York Federal Reserve economists in an Aug. 15 blog post.

Banks typically see sharp upticks in seriously delinquent payments when the economy softens and a large number of people lose their jobs.

Despite recent increases in missed payments, credit card delinquencies by 30 days or more are still relatively rare by historical standards.

The number of late payments issuers record has been historically low for several years now.

Delinquencies were expected to become more common as banks opened up credit to a larger number of cardholders with damaged scores. However, banks have been relatively conservative about how much credit they allow cardholders with lower scores to get, limiting their risk.

According to research by the American Bankers Association, for example, consumers with low scores are given, on average, just $2,574 in available credit when they open a new card. Cardholders with midtier scores, by contrast, are awarded roughly $5,635 on average, while cardholders with the best scores are given credit lines totaling $10,299 on average.

Credit card issuers have also approved the majority of their new cards to consumers with excellent scores. According to the New York Federal Reserve, recent increases in the number of cards that banks issue to consumers with lower scores have slowed over the past year. However, consumers with good to excellent credit are continuing to open cards at significantly higher rates. 

CreditCards.com’s Weekly Rate Report
  Avg. APR Last week 6 months ago
National average 16.15% 16.14%
Low interest 12.89%
12.88% 12.37%
Cash back 16.40%
Balance transfer 15.38%
Business 13.68%
Student 15.70%
Airline 16.07%
Reward  16.24%
Instant approval 18.60%
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: Sept. 20, 2017

See related: Historic credit card rates chart, Credit bureaus tighten reporting rules: Who wins, who loses?, Millennials’ credit usage lags Gen-Xers as young adults

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Updated: 02-18-2019