Credit card issuers left interest rates on brand-new credit card offers alone this week, according to CreditCards.com’s Weekly Credit Card Rate Report.
Credit card APRs held steady this week as lenders left offers alone for another week. None of the cards tracked by CreditCards.com advertised new interest rates. As a result, the average new credit card APR remained just above 16% for the fifth consecutive week.
Lenders hit pause after a tumultuous spring
Most lenders tracked by CreditCards.com have chosen to leave rates alone all summer. Among the 100 cards included in the weekly rate report, for example, just three cards have advertised new rates since early June.
Notably, though, all three of those changes were rate hikes. For example:
- Citi increased the APR on its signature balance transfer card, the Citi® Diamond Preferred® Card, by 1 percentage point. Borrowers are now offered a range starting at 13.99% and maxing out at 23.99%.
- HSBC also increased the APR on its plain vanilla balance transfer card by 1 percentage point. New owners of the HSBC Gold Mastercard credit card can now expect to be assigned an APR ranging from 13.99% to 23.99%.
- Similarly, American Express raised rates by the same amount. It increased the minimum APR on the Blue Cash Everyday® Card from American Express from 12.99% to 13.99%.
Wells Fargo also increased rates on several of its cards at the end of June. For example, it increased the APRs on the Wells Fargo Cash Wise Visa card* and the Wells Fargo Propel American Express® card* by half a percentage point. It also increased the APR on the Wells Fargo Platinum card* by 1 percentage point.
The select rate hikes followed a period of significant activity between March and part of May as lenders scrambled to adjust to the Federal Reserve’s emergency rate cuts and significantly lower rates.
As the coronavirus pandemic intensified in the U.S. in early spring, forcing businesses across the country to shut their doors, the Fed enacted two unplanned rate cuts to help stymie the aftershocks to the economy. By the end of March, the Fed had slashed its benchmark interest rate, the federal funds rate, to nearly zero. That, in turn, caused the prime rate to fall to its lowest point in years.
Most lenders responded to the Fed’s rate cuts by gradually trimming rates on new card offers by the same amount. As a result, the average card APR fell to a nearly three-year low by early May, tumbling by roughly 1.36 percentage points.
See related: How do credit card APRs work?
Large gap between average card APR and prime rate
Average card rates would have dropped even further. But some lenders, such as Capital One, chose not to match the Fed’s rate changes this time around.
As a result, the gap between the average card APR and the prime rate is unusually wide. For example, the difference between this week’s APR average and the 3.25% prime rate is 12.78 percentage points. In February, by contrast, 11.85 percentage points stood between the average card APR and the prime rate.
On some cards, the difference is even more stark. Capital One, for example, has left the APRs for its line of cards for average credit unchanged since the beginning of the pandemic. As a result, the difference between the cards’ 26.99% APR and the prime rate is currently 23.74 percentage points. In February, by contrast, 21.49 percentage points separated Capital One’s line of fair credit cards from the prime rate.
*All information about the Wells Fargo Cash Wise Visa card, the Wells Fargo Propel American Express card and the Wells Fargo Platinum card has been collected independently by CreditCards.com and has not been reviewed by the issuer. These cards are no longer available through CreditCards.com.
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: July 29, 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.