Fed Rate Increase Spurs Rise in Credit Card Rates

Fed Rate Increase Spurs Rise in Credit Card Rates
On May 10th, the Federal Reserve raised interest
rates by a quarter-point. On May 11th, many banks offering variable-rate
credit cards did the same. Those hikes are reflected in a jump
in average credit card rates this week, according to the weekly
IndexCreditCards.com Credit Card Monitor.

The average interest rate for consumer credit cards with no
rewards increased to 13.89% this week, up from 13.82% previously.
Three months ago, this average was at 13.17%, and it stood at
12.63% when 2006 began. (For those with excellent credit, the
average rate is 10.99%, up from 10.91% last week.)

The
average reward credit card rate jumped as well, up to 15.28%
from 15.23%. For those with excellent credit, the average rate
stands at 12.89%.

Students
continue to pay the highest rates, due to their lack of credit
history. The average student credit card rate is now 16.14%,
from 16.04% last week.

Business
credit card rates are also on an upswing, although they offer
lower rates overall. The average non-reward business credit
card rate stands at 11.52%, up from 11.46% last week. Business
credit cards with rewards offer a 13.59% rate, up slightly from
13.57%.

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.