Rate survey: Average card APR remains at record high of 16.32 percent


Kelly Dilworth

Personal finance writer
Specializing in new trends in credit

The average credit card APR
held steady at 16.32 percent this week, according to the CreditCards.com Weekly
Credit Card Rate Report.

A handful of cards included
in the weekly rate report advertised slightly higher APRs. Both SunTrust and
U.S. Bank boosted APRs by a quarter of a percent in tandem with the Federal Reserve’s
December 2017 rate hike. But the changes were too small to affect the national

Since the Federal Reserve
hiked the APR on its benchmark interest rate, the federal funds rate, most
major card issuers have revised rates upward by the same amount. As a result, the
national average APR broke a new record this month when it hit 16.32 percent.

Most card issuers also left
promotional terms unchanged this week. However, two lenders sweetened the
promotional terms on some of their cards. Wells Fargo extended the 0 percent
promotional offer on its rewards card from 12 to 15 months. Meanwhile, Navy
Federal Credit Union reintroduced a 12-month, 0 percent balance transfer offer
to its line of credit cards.

Card balances expand to record high
Consumers are continuing pack on
credit card debt and use their cards more freely. According to new research
from the Federal Reserve, revolving debt jumped to a record
high in November as more cardholders turned to credit to pay for purchases.

Credit card debt expanded by
more than 13 percent, indicating that cardholders are undaunted by the rising
cost of credit.  

The Federal Reserve’s latest
consumer credit report bolsters previous research – as well as reports from
card-issuing banks – that cardholders are continuing to charge
larger amounts to their cards, despite steadily increasing interest rates.

The American Bankers
Association’s latest Credit Card Market Monitor, released in October, for
example, found that
credit card purchases increased by 9 percent in the second quarter of 2017.

Average card APRs have risen
by more than a full percentage point since the Federal Reserve first began
hiking rates in December 2015 – a large enough increase to make a significant
impact on hefty balances.

However, fewer than half of all cardholders are
affected by the rate increases: According to the American
Bankers Association, for example, just 43 percent of cardholders revolved a
balance in the second quarter of 2017.

Late card payments dip despite rising card balances
The uptick in rates and balances has caused a
growing number of cardholders to fall behind on their bills. According to research
from the credit reporting agency TransUnion, late payments on
credit cards have increased significantly since the fourth quarter of 2015, in
part because of pricier credit.

TransUnion predicted late payments on credit cards would continue to become somewhat more common
over the next year. However, new research from the American Bankers Association
shows cardholders, for the most part, are still managing to maintain control over their
balances, despite increasing card APRs.

Research released
Jan. 9 found late payments on cards issued by banks actually
declined slightly in the third quarter of 2017, falling from 2.67 to 2.62 percent. Overall, delinquencies – late payments by 30 days or
more – are more common than they were in 2014, but they’re still relatively
rare by historical standards.

“Consumers continue to take a
disciplined approach to managing their credit cards, which has kept
delinquencies in this category near historical lows for more than five years,”
said ABA chief economist James Chessen in a news release.

CreditCards.com’s Weekly Rate Report
  Avg. APR
Last week 6 months ago
National average 16.32% 16.32% 16.06%
Low interest 13.08% 13.07% 12.87%
Cash back 16.56% 16.55% 16.26%
Balance transfer 15.56% 15.55% 15.30%
Business 13.91% 13.87% 13.86%
Student 15.92% 15.92% 15.14%
Airline 16.26% 16.25% 15.99%
Reward  16.41% 16.40% 16.14%
Instant approval 18.74% 18.74% 18.51%
Bad credit 23.59% 23.59% 23.43%
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.)
Source: CreditCards.com
Updated: Jan. 10, 2018

See related: Historic credit card rates chart, Fed data: We’re using credit cards for smaller purchases, Low interest, plain vanilla cards rare from major issuers

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