Interest rates on new credit card offers ticked up this week,
according to the CreditCards.com Weekly Credit Card Rate
The national average annual percentage rate (APR) rose to 14.94
percent Wednesday. This is the first time in three months that the
national average has increased.
Chase prompted this week's rate change by increasing the APR on
the Chase Freedom card by one percentage point.
The cash-back card previously featured an APR range of 12.99
percent to 22.99 percent. Now, cardholders may be offered an APR
from 13.99 percent or as high as 22.99 percent.
The higher rate on the Chase Freedom card caused other rate
categories to rise as well. For example, the average APR for
cash-back credit cards is now 14.17 percent, up from 14.13 percent.
The average APR for balance transfer cards also rose from 12.59
percent to 12.62 percent.
Rewards cards pushing rates higher
Despite occasional fluctuations, credit card interest rates have
remained exceptionally stable for more than two years now. For
example, the national average has remained above 14.9 percent for
the past 26 months and hasn't moved past 15.1 percent since January
Issuers have made so few changes to card offers, in fact, that
the national average has remained within rounding distance of 15
percent since late 2010.
According to CreditCards.com data, rewards credit cards, such as
the Chase Freedom card, are partially to blame for that relatively
high average rate.
That's because most credit cards these days are now rewards
cards. Among the 100 cards in the CreditCards.com database, for
example, approximately two-thirds of the cards offer cardholders
some kind of credit card reward, such as cash-back or rewards
points, in return for making purchases.
That trend has led to higher interest rates for many
cardholders, including those with pristine credit. In order to help
pay for the extra perks, issuers tend to charge cardholders
significantly higher rates on rewards credit cards than on plain
vanilla credit cards.
The difference in rates is even more pronounced for basic,
low-interest credit cards. The average APR for low-interest cards
is currently 10.29 percent. Compare that to the average APR for
rewards cards, which is nearly four percentage points
Cardholders' financial health improving
Despite higher APRs in recent years, a record number of credit card
holders have managed to keep up with their payments -- especially
in the past year.
Late payments by 60 days or more, for example, have tumbled in
the past 12 months, falling by 28 percent, according to
from Fitch Ratings.
Credit card charge-offs -- which measure the number of accounts
that credit card issuers have written off as uncollectible -- are
also at historic lows, falling 23 percent since this time last
The number of accounts that are still in positive standing is a
good measure of how far consumers have come since the
For example, credit card charge-offs are down by 65 percent
since 2009, according to Fitch, showing that even late payers are
doing well enough financially to at least send a payment when they
Credit card holders are also remaining disciplined about how
much debt they take on, making it easier for them to pay their
bills on time.
For example, credit card debt fell by $1.7 billion in March,
according to research released Tuesday by the
The Fed's latest report on household debt and credit marked the
first time this year that cardholders have pulled back on the
amount of credit card debt they take on.
However, despite occasional months of freer-than-usual spending,
cardholders have been slow to add more than a moderate amount of
debt to their balances through most of the past year.
More consumers ditch rewards, go with plain
vanilla credit cards