Low interest, plain vanilla cards rare from major issuers

To find low rates, cardholders have to look to smaller banks, credit unions

Kelly Dilworth
Personal finance writer
Specializing in new trends in credit

Survey: Low interest plain vanilla cards all but extinct at major issuers

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It’s getting harder for consumers who carry a balance to find a basic, plain vanilla credit card with a genuinely low interest rate.

According to a CreditCards.com survey of more than 100 U.S. banks and credit unions, basic, no-frills cards with exceptionally low rates have become all but extinct at the nation’s largest card issuers and appear to be disappearing at smaller institutions.

Among the country’s 12 leading issuers, just three – U.S. Bank, PNC Bank and USAA – offer cards with minimum interest rates below 11 percent. The rest of the no-frills cards still available at the nation’s largest banks charge minimum rates ranging from 12.99 to 24.99 percent – despite often being marketed as “low interest credit cards.” Many smaller banks and credit unions also have hiked the APRs on their most basic credit cards or stopped offering plain vanilla cards altogether.

The higher rates on even basic credit cards have concerned consumer advocates who worry about cardholders’ ability to repay such hefty charges. “Paying back balances at these very high rates becomes very costly for consumers,” says Ruth Susswein, deputy director of the advocacy group Consumer Action.

Cardholders who apply for cards with higher rates may not expect to ever carry a balance. “But then life gets in the way,” says Susswein. “And the next thing you know, you didn’t pay the full balance and you have a credit card balance.”

According to research from the American Bankers Association (ABA), around 43 percent of cardholders with a bank-issued credit card revolve a balance.  

What are plain vanilla credit cards?

Popular with consumers who want to avoid temptation or bypass complicated rewards schemes, “A plain vanilla card is one that doesn’t have rewards,” says credit card expert Beverly Harzog. “No bells and whistles. It’s just a plain card you use to build credit.”

Personal finance experts often urge cardholders to keep a no-frills card on hand because they have a reputation for helping people save money with lower rates. “It’s good to have a card like this, just in case you need to carry a balance for a couple of months,” says Harzog.

"A plain vanilla card is one that doesn’t have rewards. No bells and whistles. It’s just a plain card you use to build credit."

Even avid rewards card users are encouraged to apply for and maintain a basic, low interest credit card. “In general, it’s a good idea to have more than one revolving account,” says Thomas Nitzsche of the credit counseling group Money Management International. “Have one that you plan on using for rewards and one with a lower interest rate.”

But research by CreditCards.com and others indicates that many of the mostly widely available plain vanilla cards aren’t nearly as affordable as they seem. 

Not always the cheapest available credit card

According to the market research firm Mintel Comperemedia, plain vanilla credit cards account for roughly 28 percent of the card offers consumers receive by mail.

But surprisingly, many of those card offers don’t necessarily advertise the lowest rates people can get. Instead, research from Mintel shows that interest rates on rewards card offers are actually lower, on average, than the rates showing up on basic cards with no rewards or annual fee.  

“Plain vanilla is no longer as competitive on price,” wrote Mintel senior analyst Claude Lawrence in an email. The average APR for general market cards with rewards, for example, was 15.8 percent in the third quarter of 2017. For plain vanilla cards, it was 18.3 percent.

A separate analysis by CreditCards.com also found that many of the most widely available no-frills credit cards are just as expensive as rewards cards.

For example, one of the best-known plain vanilla cards, the Chase Slate card, charges a minimum APR of 15.99 percent and a maximum rate of 24.74 percent. The popular Citi Simplicity card charges between 14.99 and 24.99 percent, while the Wells Fargo Platinum card charges between 16.15 and 25.99 percent.

To find rates lower than 11 percent – an APR that used to be much more common – cardholders typically have to look to smaller banks and credit unions. That, in turn, has raised questions about how accessible low interest credit cards are to some consumers and how affordable carrying a balance has become.

"Plain vanilla is no longer as competitive on price."

“Many issuers seem to focus on temporary ‘no rates’ rather than long-term low rates,” says Susswein. For example, many card offers advertise an interest-free balance transfer lasting 12 months, 15 months or longer. “But then, of course, the rate shoots up dramatically,” she says, if cardholders fail to pay their balance in full by the end of the promotion.

Looking beyond major card issuing banks

Most plain vanilla credit cards advertise such a wide range of possible interest rates that it’s impossible to get a sense of precisely how much interest most people are being charged. When comparing rates on new card offers, “You have to look at the higher number, too, because it could be 10 points more,” says Susswein. 

But according to a CreditCards.com analysis, many consumers with no-frills cards are paying rates at least as high as 14 to 20 percent, even if they obtained their cards from a smaller bank or credit union. 

CreditCards.com reviewed a representative sample of 100 basic, plain vanilla credit cards culled from a mix of banks and credit unions. Our research found that the average minimum APR for all 100 cards was just 10.72 percent – largely thanks to regional banks and credit unions that offer much lower rates than bigger banks.

But because nearly all the cards reviewed advertise a wide range of potential APRs, the actual credit card APR that many new cardholders are being charged is significantly higher than the lowest posted rates. The median card APR, for example, is 14.9 percent, while the average maximum APR is 19.08 percent.   

In addition, CreditCards.com found:  

  • Fewer than 10 percent of plain vanilla credit cards come from the nation’s 12 leading card issuers.
    Bank of America, Chase, Capital One, Citi, U.S. Bank, PNC and USAA are the only major card issuers offering no annual fee cards without rewards. Barclaycard recently discontinued its plain vanilla card, the Barclaycard Ring MasterCard.

  • Most plain vanilla cards from the country’s biggest banks are pricey.
    Among the nine major bank cards included in the survey, the average minimum rate is 14.33 percent, while the average maximum rate is 24.06 percent.

  • Plain vanilla cards from major issuers typically offer generous promotions.
    Nearly all the major bank cards included in the survey offer 0 percent APRs on purchases and balance transfers for at least 15 months. Four cards offer interest-free promotions lasting as long as 18 to 21 months.

Cardholders with excellent credit can still find exceptionally low rates on select cards. However, they will have to look beyond the major card issuers to find them.

“Look a little outside of the box. It doesn’t have to be from a big bank that everyone uses,” says Harzog. “If you go with a lesser-known bank, you might find a better deal.”

According to CreditCards.com’s survey of 100 plain vanilla credit cards:

  • Smaller institutions are much more likely to offer lower rates.
    Among the 100 cards CreditCards.com surveyed, 81 offered rates below 12 percent. However, nearly all those cards came from regional banks and credit unions.

  • The most affordable low rate cards typically come from credit unions.
    According to the survey, 38 cards offered APRs of less than 10 percent. Thirty-two of those cards were issued by a credit union. Just six were issued by a bank.

  • Really low rate cards still exist.
    Twenty-three of the 100 cards CreditCards.com sampled offered minimum rates ranging from 6.99 to 8.99 percent – rates that are all but unheard of at larger issuers.

  • Super low rates are hard to get.
    However, all 23 cards that offer rates below 9 percent are only available to cardholders who live in certain regions or belong to select groups. For example, some cards, such as the USAA Rate Advantage card and the Navy Federal Credit Union card, are only available to people connected to the military or government. Other cards are only available to cardholders who live in certain regions.

  • Promotional offers are less generous at smaller institutions.
    Most cards from smaller banks and credit unions gave cardholders just six to 12 months to take advantage of an interest-free or low rate promotion.

The survey also found that many smaller institutions don’t offer plain vanilla cards at all. Instead, a significant number of banks and credit unions only offer cards with a rewards program, making it tough for cardholders who want a simpler card to find a match.

Low rate, no annual fee, credit card superstars

Card Name Min APR Max APR Intro APR
Navy Federal Credit Union Platinum card 6.99% 18% None
Trustmark Visa Platinum card 7.15% 12.15% 0% for 6 months
Patelco Credit Union Pure Mastercard 7.2% 11.2% None
Northwest Loyalty Visa card 7.24% 10.24% None
Wright Pratt Credit Union Low Rate Visa 7.25% 15.25% None
Lake Michigan Credit Union Prime Platinum Visa 7.25% 15.25% None
Star One Credit Union Visa Platinum Best Rate card 7.75% 13.75% None
BECU Visa credit card 7.9% 18.9% 0% for 12 months
USAA Rate Advantage Visa Platinum card 7.9% 24.9% None
Redstone Federal Credit Union Visa Traditional 8% 11.5% None
American Airlines Credit Union Visa Platinum card 8% 13.24% None
Northwest Federal Credit Union Choice MasterCard 8.24% 18% 3.90% for 12 months
Synovus Classic Visa credit card 8.24% 22.24% 0% for 6 months
Eastman Credit Union credit card 8.25% 17.25% None
Security Service Federal Credit Union Power Mastercard 8.49% 17.74% None
RBFCU Premier Rate card 8.7% 17.7% 0% for 12 months
NC State Employees Credit Union 8.75% 8.75% None
MSUFCU Platinum Visa credit card 8.9% 16.9% None
PenFed Gold Visa card 8.99% 17.99% None
Ent Credit Union Visa Platinum card 8.99% 17.99% 0% for 6 months
Kinecta MyPower Mastercard 8.99% 18% 0% for 6 months
Mountain America Visa Platinum card 8.99% 18% None
First Citizens Smart Option Visa card 8.99% 19.99% None

All terms and conditions are subject to change by issuer. Current as of Dec. 12, 2017.

Interest rates are going to keep going up

Experts say that interest rates are likely to keep rising on all credit cards, including plain vanilla and rewards cards, as the Federal Reserve continues to hike rates. Including the Dec. 13 rate hike, the Federal Reserve has increased its benchmark interest rate by a 1.25 percent since 2015, prompting most lenders to increase rates by the same amount.

The Fed projects it will raise rates three more times in 2018, which will prompt more card APR hikes. 

The widespread rate increases could prompt some card issuers to differentiate their credit cards by offering more competitive APRs, says Mintel’s Claude Lawrence. “Credit cards overall are getting more expensive,” wrote Lawrence in an email. However, some card issuers may see an opportunity to buck the trend and promote a lower APR.

Already, at least one credit card issuer, Navy Federal Credit Union, has said it cut rates on two of its cards in response to widespread rate hikes. At the time, NFCU’s Matt Freeman specifically pointed to the higher rates being charged by competitors. “We definitely thought there was an opportunity to separate ourselves,” he said. 

See related: Plain vanilla credit cards: 5 reasons to choose one, Guide to coping with higher interest rates


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Updated: 06-22-2018