Rate survey: Average card APR jumps to all-time high of 16.62 percent

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Kelly Dilworth

Personal finance writer
Specializing in new trends in credit

The
average credit card interest rate broke a new record this week, landing within
rounding distance of 17 percent for the first time, according to the Weekly
Credit Card Rate Report. The national average APR jumped to an all-time high of
16.62 percent after numerous credit cards tracked by CreditCards.com advertised
higher rates.

CreditCards.com
reviewed the APRs, annual fees and promotional terms of 100 of the most popular
U.S. credit cards. Among the 100 cards included in the weekly rate report, 43
advertised higher rates this week.

In most
cases, the higher advertised rates were due to the Federal Reserve’s March 2018
quarter-point rate hike. When the Federal Reserve increases interest rates,
most variable rate cards eventually raise rates by the same amount.

Last week,
23 of the cards included in the Weekly Rate Report hiked rates by 0.25 percent.
This week, 40 cards matched the Federal Reserve’s latest rate hike.

One card
issuer, Pentagon Federal Credit Union, increased rates by significantly more.
For example, it increased the lowest available APR on the PenFed Power Cash
Rewards Visa
card by a full percentage point, raising it to 10.99 percent.
Meanwhile, it increased the minimum APR on the PenFed Promise Visa card from a
low of 9.74 to 10.99 percent.

Another
card included in the weekly rate report, the Cabela’s Club Visa, also increased
rates this week. But unlike most U.S. credit cards, the Cabela’s Club retail
card isn’t tied to the U.S. Prime Rate and so isn’t affected by the Federal
Reserve’s rate changes. Instead, it’s tied to the one-month Libor rate. This
week, the sporting goods store Cabela’s increased its store card’s lowest
available APR from 16.65 to 16.87 percent. It raised the card’s maximum APR to
25.87 percent.

None of
the cards monitored by CreditCards.com advertised new promotions.

Digital payments are becoming more
popular

Consumers
are becoming increasingly open to using alternative payment methods such as
mobile wallets and virtual assistants to pay for goods and services, according
to new research from the payment company TSYS.

TSYS
surveyed more than 1,000 credit and debit card owners and found a growing
number of cardholders are considering swapping out their plastic cards for
digital payments – at least for some of their in-store and online purchases.
For example, 51 percent of cardholders expressed interest in using their mobile
phone to pay for something at a store. In 2016, by contrast, just 40 percent of
consumers said the same.

Meanwhile,
the percentage of cardholders who say they have already checked out of a
store at least once using a mobile phone rather than a physical credit or debit
card rose to 12 percent in 2017, up from just 7 percent in 2015. 

Younger
consumers are especially likely to embrace alternative payment methods. For
example, among those between the ages of 25 and 34 who own an AI-enabled virtual
assistant, such as Amazon’s Alexa or Google Home, 76 percent said they
wouldn’t mind using their virtual assistant to make payments. Just 60 percent
of virtual assistant owners overall said the same.

Meanwhile,
nearly half of cardholders between the ages of 25 and 34 – 45 percent – have
also used payment-to person (P2P) providers, such as PayPal or Zelle, to
transfer money to other consumers. However, only 29 percent of cardholders
overall said they’d used these services, indicating that older cardholders are
more reluctant to use P2P apps to transfer money.  

Old-fashioned
plastic continues to be consumers’ top choice overall, TSYS found, despite
increased interest in digital payments. For example, 44 percent of cardholders
said they prefer to use their debit cards for payments. Thirty-three percent
said they rather use credit cards, while 12 percent said they prefer cash.  



















CreditCards.com’s Weekly Rate Report
  Avg. APR Last week 6 months ago
National average 16.62% 16.47%
16.15%
Low interest 13.42%
13.21% 12.89%
Cash back 16.90%
16.70%
16.40%
Balance transfer 15.83%
15.70%
15.38%
Business 14.30%
14.01%
13.68%
Student 16.10%
15.98%
15.70%
Airline 16.57%
16.47%
16.07%
Reward  16.71%
16.56%
16.24%
Instant approval 18.97%
18.82%
18.60%
Bad credit 23.74%
23.68%
23.46%
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: April 4, 2018


See related: Historic credit card rates chart, Credit card payments fall to lowest level in three years





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