The average credit card interest rate rose above 16% for the first time since August, as U.S. Bank significantly hiked the APR on its flagship secured credit card.
The average credit card interest rate is 16.04%.
The average APR for brand-new cards jumped above 16% Wednesday for the first time since September after U.S. Bank hiked the APR on its flagship secured credit card.
The Minneapolis-based lender raised the single APR on the U.S. Bank Secured Visa Card* by seven percentage points, which is one of the most dramatic rate hikes on a single card that CreditCards.com has recorded in months.
Borrowers who apply for the secured card can now expect a 25.99% APR, up from a previous high of 18.99%.
In addition to hiking the card’s APR, U.S. Bank also dropped the secured card’s annual fee. Previously, it charged cardholders who are building or rebuilding their credit a $29 annual fee.
U.S. Bank’s decision to cancel the card’s annual fee follows a years-long tradition amongst credit card issuers: annual fees have become increasingly uncommon on secured cards, particularly amongst major issuers.
But despite dropping the annual fee on its flagship secured card, U.S. Bank no longer offers one of the least expensive subprime cards from a major issuer. Instead, the bankcard’s revised APR makes it one of the more expensive bank-issued secured cards on the market.
See related: How do credit card APRs work?
Secured card’s APR now one of the highest on the market
Until this week, the U.S. Bank Secured card was one of the most affordable options available to subprime cardholders who needed to carry a balance. Among the seven largest credit card issuers, for example, U.S. Bank was the only one to offer a secured card APR under 20%.
Now, the only issuer in the group that charges secured cardholders a higher APR is Capital One. It charges a 26.99% variable APR for its no-annual-fee Secured Mastercard® from Capital One.
Other major card issuers, by contrast, charge APRs closer to 20% for no-annual-fee secured cards. For example:
- Discover charges a 22.99% variable APR for its no-annual-fee cash back card, the Discover it® Secured card.
- Citi charges a 22.49% variable APR for its no-annual-fee plain vanilla card, the Citi® Secured Mastercard®*.
- Bank of America charges a 22.99% variable APR for its no-annual-fee BankAmericard Secured Credit Card* and a 23.99% variable APR for its no-annual-fee Bank of America Cash Rewards Secured card*.
Meanwhile, Wells Fargo dropped its secured card last year, narrowing consumers’ options. Chase and American Express don’t offer secured cards.
U.S. Bank customers looking for a lower APR on a secured card may be able to get a lower APR on a partner card, though. For example, U.S. Bank charges a 22.99% APR on the Harley Davidson Secured credit card and on the LATAM Visa Secured card.
Consumers with a connection to the military or to the Department of Defense may also qualify for a lower rate card. USAA and Pentagon Federal Credit Union don’t currently offer secured cards. However, Navy Federal Credit Union offers a secured rewards card, the Navy Federal Credit Union nRewards Secured Credit Card, with an 18.00% APR.
*All information about the U.S. Bank Secured Visa Card, the Citi Secured Mastercard, the Bank of Americard Secured Credit Card and the Bank of America Cash Rewards Secured card has been collected independently by CreditCards.com and has not been reviewed by the issuer.
CreditCards.com’s Weekly Rate Report
|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 18, 2020|
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% 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.
See related: How to lower your credit card interest rate