The average APR on new credit card offers tumbled 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 tumbled Wednesday to its lowest point since the beginning of the year, according to the CreditCards.com Weekly Credit Card Rate Report. The last time the average card APR fell below 17.30 percent was in December, when the national average APR ended the year at 17.21 percent.
Every week, CreditCards.com evaluates the APRs, annual fees and promotional terms of 100 U.S. credit card offers.
The Federal Reserve spurred this week’s rate change by cutting its benchmark interest rate, the federal funds rate, by a quarter of a percentage point at its October meeting. It was the third time this year the Fed opted to cut rates.
When the Federal Reserve revises its benchmark interest rate, card issuers trim rates by the same amount on all existing variable rate offers. However, they are sometimes slower to trim rates on brand-new credit cards.
So far, five of the country’s largest card issuers, including Discover, American Express, U.S. Bank, Wells Fargo and Barclaycard, have responded to the Fed’s rate change by promptly trimming rates on new card offers.
Several smaller issuers, including Huntington Bank, Regions and PNC, have also pared back rates by a quarter of a percentage point. As a result, the average card APR fell by a tenth of a percentage point this week.
The average card APR is almost certain to fall again in the coming weeks as more lenders cut rates on new offers. Major banks that have yet to tweak new offers include Bank of America, Chase and Capital One.
If the majority of card issuers decide to cut rates on brand-new credit card offers, the average card APR could fall even closer to 17 percent.
Lenders are free to set rates as they wish on brand-new credit card offers. However, so far, most issuers have opted to cut rates in tandem with the Fed.
A number of issuers have independently hiked APRs in recent months, though, so consumers searching for a new card may not see lower APRs across the board.
Consumers who haven’t searched for a new credit card in years are also likely to see much higher rates than the last time they compared card offers.
Despite recent drops in the average credit card interest rate, the national average APR is still well above the historical average. In 2015, for example, the average new card APR for the year was just 15.07 percent. In 2010, it was 14.31 percent.
Average rates on new credit card offers are also likely to remain at historically high levels, even if the Fed decides to cut rates again in the near future.
The average card APR would have to fall by roughly 2 percentage points, for example, to return to 2015 levels. But even if the Fed cut the federal funds rate to rock bottom and every card issuer included in the weekly rate report matched the Fed’s rate change, the national average card APR would still only fall by around 1 and a half percentage points.
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 6, 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.