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.
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