The average APR on new credit card offers fell again Wednesday to its lowest point of the year, according to the CreditCards.com Weekly Credit Card Rate Report.
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The average APR on new credit card offers fell further Wednesday to its lowest point of the year, according to the CreditCards.com Weekly Credit Card Rate Report. The last time the average APR was this low was in December when the average card APR ended the year at 17.21 percent.
Average rates have now fallen by more than half a percentage point since July, erasing months’ worth of gains. The average card APR is now just 0.11 percentage points higher than it was a year ago, when the national average APR stood at 17.14 percent.
Interest rates are likely to fall further in the coming weeks as more card issuers match the Federal Reserve’s latest rate cut.
The Fed cut its benchmark interest rate, the federal funds rate, by a quarter of a percentage point in October, prompting several card issuers to cut rates on both new and existing cards. It was the third time since July that the Fed had decided to cut rates.
Lenders are contractually required to match changes in the prime rate (which is tied to the federal funds rate) on cards consumers already own. However, they are free to independently set rates on new offers.
This week, several card issuers, including Citi and SunTrust, pared APRs on new offers by 0.25 percent. Earlier this month, several other major lenders, including American Express, U.S. Bank, Wells Fargo and Barclaycard, also cut rates by a quarter of a percent.
So far, not all lenders have matched the Fed’s latest rate changes, so the national average APR is likely to keep dropping if more lenders join Citi, American Express, U.S. Bank, Wells Fargo and Barclaycard. Since the Federal Reserve first began cutting rates in July, most major lenders have matched the changes on new offers.
The Fed may not cut rates again anytime soon, though, so the average APR may settle around 17.20 percent in the coming weeks.
Fed Chairman Jerome Powell indicated to lawmakers on Nov. 13 that the Fed is likely to hold back from cutting rates any further – at least in the coming months.
“We see the current stance of monetary policy as likely to remain appropriate as long as incoming information about the economy remains broadly consistent with our outlook of moderate economic growth, a strong labor market and inflation near our symmetric 2 percent objective,” Powell said in prepared remarks.
Bank of America tweaks its business card lineup
Every week, CreditCards.com evaluates the APRs, annual fees and promotional terms of 100 U.S. credit card offers.
None of the cards included in the weekly rate report advertised new promotional terms.
However, Bank of America took one of its low interest business cards, the Bank of America Platinum Visa Business card, offline and redirected applicants to the Bank of America® Platinum Plus® Mastercard® Business card, which charges a slightly higher APR. In response, CreditCards.com swapped out the Platinum Visa card with the Platinum Plus card in its survey of 100 cards.
Platinum Plus cardholders are offered a range of variable APRs starting at 11.99 percent and maxing out at 22.99 percent. They are also offered a $300 statement credit when they charge $3,000 within the card’s first 90 days.
Average credit card interest rates this week
|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: November 13, 2019|
Historic interest rates by card type
Some credit cards charge even higher rates, on average. The type of rate you get will depend in part on the category of credit card you own. For example, even the best travel credit cards often charge higher rates than basic, low interest credit cards.
CreditCards.com has been calculating average rates for a wide variety of credit card categories, including student cards, balance transfer cards, cash back cards and more, since 2007.
How to get a low credit card interest rate
Your odds of getting approved for a card’s lowest rate will increase the more you improve your credit score. Some factors that influence your credit card APR will be out of your control, such as the length of time you’ve been handling credit.
However, even if you’re new to credit or are rebuilding your score, there are steps you can take to ensure a lower APR. For example:
- Pay your bills on time. The single most important factor influencing your credit score – and your ability to win a lower rate – is your track record of making on-time payments. Lenders are more likely to trust you with a competitive APR – and other positive terms, such as a big credit limit – if you have a lengthy history of paying your bills on time.
- Keep your balances low. Lenders also want to see that you are responsible with your credit and don’t overcharge. As a result, credit scores take into account the amount of credit you’re using, compared to how much credit you’ve been given. This is known as your credit utilization ratio. Typically, the lower your ratio, the better. For example, personal finance experts often recommend that you keep your balances well below 30 percent of your total credit limit.
- Build a lengthy and diverse credit history. Lenders also like to see that you’ve been successfully using credit for a long time and have experience with different types of credit, including revolving credit and installment loans. As a result, credit scores, such as the FICO score and VantageScore, factor in the average length of your credit history and the types of loans you’ve handled (which is known as your credit mix). To keep your credit history as long as possible, continue to use your oldest credit card so your lender doesn’t close it.
- Call your lender. If you’ve successfully owned a credit card for a long time, you may be able to convince your lender to lower your interest rate – especially if you have excellent credit. Reach out to your lender and ask if they’d be willing to negotiate a lower APR.
- Monitor your credit report. Check your credit reports regularly to make sure you’re being accurately scored.The last thing you want is for a mistake or unauthorized account to drag down your credit score. You have the right to check your credit reports from each major credit bureau (Equifax, Experian and TransUnion) once per year for free through AnnualCreditReport.com.