Interest rates keep rising as credit card reform looms

As new credit card legislation draws closer, interest rates continue to rise.'s Weekly Rate Report
  Avg. APR Last week 6 months ago
National average 13.17%
Business 10.74%
10.74% 11.41%
Low interest 12.17%
Balance transfer 12.40%
Cash back  12.49%
Reward 13.47% 13.44%
Bad credit
Airline 14.17%
Student 14.71%
Instant approval 17.62%
Methodology: The national average credit card APR is comprised of 95 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: 1-20-2010

Interest rates on new credit card offers increased slightly to 13.17 percent this week, according to the Weekly Credit Card Rate Report, reaching heights not seen since October 2007.

The latest rise in annual percentage rates comes as banks continue to adjust their card offers before major provisions of the landmark Credit CARD Act take effect on Feb. 22. That consumer friendly legislation will, among other things, restrict banks' ability to adjust card terms.  

As the CARD Act limits the ways banks make money off cardholders, lenders must change their strategies. "If the government takes away one avenue for rate of return, they look for other ways to generate," income, says Wisconsin School of Business professor Morris A. Davis.

Among the latest moves by issuers, Bank of America increased the APR on one of its cards, and Discover raised the top end of the APR range on one of its cards. Other terms and conditions are being tweaked as well. For example, four cards eliminated or shortened introductory balance transfer APR periods.

Those adjustments by banks are costing cardholders. For example, someone who borrowed $5,000 on a credit card today and consistently paid $150 per month at today's average interest rate would have to pay $6,259 to pay off the debt. That's $141 more than would have been required six months earlier.

Since both BofA and Discover's cards were rewards cards, that category saw rates increase this week. That category has jumped by more than a point in the past six months. 

Experts predict that the CARD Act means borrowing on plastic won't get any cheaper. Among the changes coming in February:

  • No interest rate hikes in the first year after a new credit card is issued.
  • No applying rate hikes to existing card balances retroactively, except under limited circumstances.

Those changes means banks will have to adapt -- and cardholders will have to pay. "Any legislation that makes it harder for them to do business, you're going to end up with higher rates," Davis says.

See related: A guide to the Credit CARD Act of 2009, Fed issues final Credit CARD Act rules, Creative new fees escape CARD Act rules, surprise consumers

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Updated: 03-26-2019