Bank credit card rates are now at their highest levels in four years and poised to head higher in 2016 in the wake of last month’s rise in the Prime Rate.
Given more than 90% of U.S issued bank credit cards are based on the Prime Rate, the expectation of further increases this year could push rates to seven-year highs.
According to Federal Reserve, the average rate for all bank credit card accounts rose to 12.22% in November, compared to 12.10% for the third quarter, and compared to 11.99% end-of-year (EOY) 2014. This is the highest since EOY 2011 when the rate for all accounts stood at 12.74%.
Based on the same data, the average rate for all bank credit card accounts assessed interest rose to 13.70% in November, compared to 13.93% for the third quarter, and compared to 13.68% end-of-year (EOY) 2014. With the exception of 3Q/15, this is the highest since EOY 2010 when the rate for all accounts stood at 14.26%.
According to the latest CreditCards.com Credit Card Rate Report, the national average annual percentage rate (APR) for the 100 most popular cards rose to 15.13% this month, a four-year high. The last time average rates were this high was in January 2012, when the national average began the year at 15.14%. Since then, average rates have mostly hovered between 14.90% and 15.09%.
U.S. Credit Card APRs for All Accounts
EOY 2010: 13.78%
EOY 2011: 12.74%
EOY 2012: 12.06%
EOY 2013: 11.91%
EOY 2014: 11.87%
EOY 2015: 12.22%
U.S. Credit Card APRs for All Accounts Accruing Interest Charges
EOY 2010: 14.26%
EOY 2011: 13.09%
EOY 2012: 12.96%
EOY 2013: 12.95%
EOY 2014: 13.19%
EOY 2015: 13.70%
Source: Federal Reserve
January 2016 Average Credit Card Rate
National Average: 15.13%
Low Interest: 11.84%
Balance Transfer: 14.23%
Cash Back: 15.41%
Instant Approval: 18.00%
Bad Credit: 22.84%
Federal Reserve Note:
All figures revised and updated as of 1/8/16.
Interest rates are annual percentage rates (APR) as specified by the Federal Reserve’s Regulation Z. Interest rates for credit card accounts, the rate for all accounts is the stated APR averaged across all credit card accounts at all reporting banks. The rate for accounts assessed interest is the annualized ratio of total finance charges at all reporting banks to the total average daily balances against which the finance charges were assessed (excludes accounts for which no finance charges were assessed).
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