Average Credit Card Rate Tops 13 Percent

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Average Credit Card Rate Tops 13 Percent

Tuesday's

hike in federal interest rates -- the fourteenth straight hike

from the Federal Reserve -- helped push the average credit card

interest rate past the 13 percent mark, according to the weekly

IndexCreditCards.com Credit Card Monitor. Major credit card

issuers including Bank of America, Citibank, National City,

US Bancorp and Wells Fargo announced increases in their lending

rates in response to the Fed hike, meaning another quarter-point

bump for holders of these issuers' variable-rate credit cards.

Variable-rate credit cards offer interest rates based on a formula

that includes a base rate plus a percentage tied to federal

lending rates. When federal rates move up, credit card rates

follow.

The average credit card rate for standard, non-reward credit

cards jumped to 13.02% this week, while the rate for credit

cards offering rewards passed the 14 percent mark, to 14.09%.

The news is better for consumers with the very best credit --

for them, these averages are 10.28% and 11.61%, respectively.

As always, college students who carry balances are paying more.

The average APR for a student credit card moved to 15.59% this

week.

For the first time in five weeks, the average business credit

card rate also increased. However, the rise was slight, and

business card rates remained far below consumer rates. Standard

business credit cards offered an average APR of 11.37%, while

business reward credit cards offered an average rate of 13.22%.

"It's unclear whether the Fed hikes are over," says Adam Jusko,

Research Director for IndexCreditCards.com. "With Ben Bernanke

officially taking over for Alan Greenspan as Federal Reserve

chairman, predictions are varied as to his philosophy. However,

most experts think we'll see at least one more quarter-point

hike in March, so if you're carrying a variable-rate credit

card, now's the time to get it paid off."

Financial institutions represented in the survey include Advanta,

American Express, Bank of America, Capital One, Chase, Citi,

Discover, MBNA, National City, Providian, Pulaski Bank, U.S.

Bank, Wachovia, Wells Fargo and more.

 

Published 02/02/06 (Modified 05/07/12)