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) on new card
offers rose to 14.98 percent Wednesday. However, the change in
average rates was slight. The national average rose by just a
hundredth of a percentage point, after remaining stuck at 14.97
percent for four straight weeks.
This week's rise in rates was spurred by a small, single point
rate hike on a student credit card. As a result, average rates on
student cards went up slightly, from 13.02 percent to 13.16
Despite the hike in rates, however, students are still paying
less to carry a balance today than they did several years ago.
Before the Credit CARD Act of 2009 went into effect in February
2010, average rates on student cards hovered well above 14 percent.
In fact, the highest recorded average on student cards hit 17.88
percent in the fall of 2007, according to CreditCards.com data.
Since then, average rates on student cards have dropped
significantly. However, those cards have also become much harder
for students to get. That's because the CARD Act sharply restricted
students' access to credit cards by requiring students under the
age of 21 to show proof of income or persuade a co-signer to sign
up for a joint card.
That reduced the number of eligible applicants for student
cards. However, it also made it somewhat less risky for banks to
lend to student borrowers because it forced students to show they
had a way to pay their bills.
Average rates for student credit cards are now more than a full
percentage point less than they were the week the CARD Act went
into effect. However, student credit cards are still significantly
more expensive than other comparable credit cards. For example, the
average APR on a low interest credit card is 10.4 percent, while
the average APR on a balance transfer card is 12.62 percent.
Many student credit cards offered online also feature wide APR
ranges, which makes it tough for students to know how much interest
they'll actually have to pay once they apply for a card. For
example, among the credit cards that CreditCards.com tracks, the
lowest available APR on a student card is 10.99 percent. However,
that same card -- the BankAmericard for students -- also features a
maximum APR of 19.99 percent.
The second lowest available APR for students is offered by State
Farm Bank on the State Farm Student Visa Card. However, that card
also features a wide APR range. For example, depending on a
student's creditworthiness, a student applying for the State Farm
student card could get assigned an APR that's as high as 18.24
percent or as low as 11.24 percent -- a 7-point difference in
The higher maximum APRs on student credit cards aren't reflected
in the national average for student cards because CreditCards.com
only considers a card's lowest possible rate when calculating
That said, the average APR for students with less than perfect
credit is currently 19.6 percent -- more than six percentage points
higher than the average APR for students with excellent credit.