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Credit Card Rates Stable, But Fed Rate Hike Soon to Kick In

by Peter Andrew


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Credit Card Rates Stable, But Fed Rate Hike Soon to Kick In

After eight

weeks of increases, average credit card rates have now stayed

the same for two weeks in a row, according to the IndexCreditCards.com

weekly Credit Card Monitor. However, as predicted, the Federal

Reserve Board raised federal lending rates a quarter-point on

Tuesday, meaning credit card rates will soon follow.

"Next week's report will definitely show a rise in card rate

averages, as the Fed hike cycles through the issuing banks,"

says Justin McHenry, Research Director for IndexCreditCards.com.

"As always, variable-rate credit cards will raise their rates

to match the federal increase."

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


Curent credit card averages include:

  • "Top-level"

    consumer credit cards averaged a 9.97% Annual Percentage Rate

    (APR). (IndexCreditCards.com uses "top-level" to describe

    Platinum or similarly designated credit cards that generally

    offer the lowest interest rates to eligible cardholders.)

  • Consumer

    reward credit cards offered an average 11.27% APR for those

    with good credit.

  • Average

    student credit card rates remained at 15.03%.

  • Business

    credit card rates held steady for the fourth straight week,

    at an average 9.99% APR for top-level business cards and an

    average 11.74% for business reward cards.

"Averages are based on the best rates published by credit card

issuers," says McHenry. "If your credit is not top-notch, expect

rates about 2% higher than those quoted here. If your credit

is poor, obviously your rates may be even higher." 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 12/15/05 (Modified 05/07/12)

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