Credit Card Rates Up for Sixth Straight Week
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With several major banks raising rates, credit card financing became more expensive for the sixth straight week, according to the IndexCreditCards.com weekly Credit Card Monitor. American Express and Bank of America were two of the larger issuers applying increases.
“Top-level” consumer credit cards averaged a 9.87% Annual Percentage Rate (APR), up from 9.76% last week and from 9.51% just six weeks ago. (IndexCreditCards.com uses “top-level” to describe Platinum or similarly designated credit cards that generally offer the lowest interest rates to eligible cardholders.)
“Even consumers with great credit will soon have difficulty getting rates under 10%,” says Justin McHenry, Research Director for IndexCreditCards.com. “There were a lot of hikes this week, including Pulaski Bank increasing the rates on their popular low interest cards by a full one percent.”
While top-level business credit card rates also increased this week, to a 9.99% average APR, these rates have moved slower, up from 9.87% six weeks ago. “I think consumer credit card rates will go higher than the rates of business cards soon,” says McHenry. “Business credit cards are more likely to have fixed rates, so the averages move up more slowly. For small business people who’ve been relying on low-rate personal cards for certain business expenses, it may be time to switch to a business card.”
IndexCreditCards.com’s Credit Card Monitor also tracks the following categories, all of which have seen higher averages this week and over the last six weeks: Consumer
reward cards rose to an average 11.19% APR, up from 10.75% six weeks ago. This category has the highest average rate increase over that period. Business
reward credit cards rose to an average 11.74% APR, up from 11.31% six weeks ago. Student
credit card rates increased to 14.96%, up from 14.72% six weeks ago.
“As always, these averages are based on the lowest rates published by the card issuers,” says McHenry. “If you don’t have excellent credit, add 2% to estimate the rate you would likely receive. If your credit is poor, count on even higher rates.”
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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