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With Thirteenth Straight Federal Increase, Credit Card Rates Rise Again

by Peter Andrew


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With Thirteenth Straight Federal Increase, Credit Card Rates

Rise Again


December 13th, the Federal Reserve Board hiked bank lending

rates for the 13th straight time, meaning bad luck for credit

card holders who carry a balance. This week, average credit

card rates rose above 10% for even the most credit-worthy customers,

while the overall rate average rose to over 12.5%, according

to the IndexCreditCards.com Credit Card Monitor.

Federal lending rates directly impact the rates on variable-rate

credit cards, and, over the long term, generally affect the

fixed rates that card issuers can offer. Federal lending rates

have risen 3.25% since June of 2004 and are at their highest

point since May of 2001. Among the card issuers applying quarter-point

increases on variable-rate cards this week: American Express,

Citibank, National City, U.S. Bank.

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

cards is currently 12.58%. The average rate for consumer credit

cards with rewards is 13.64%. For consumers with excellent credit,

these averages are 10.07% and 11.38%, respectively. In the last

two months, average rates have risen over a quarter-point (.37%)

on standard credit cards and over a half-point (.54%) on reward


(Starting this week, IndexCreditCards.com has added the "standard"

averages quoted above to the Credit Card Monitor. Previously,

only "top level," or platinum-type cards were used, with the

lowest published rates used in calculating averages. This additional

statistic should provide a clearer picture of what the "typical"

consumer is paying in today's market.)

"Even customers with the best credit are paying over 10% on

average," says Justin McHenry, Research Director for IndexCreditCards.com.

"There are still good credit card deals out there, but it takes

more digging to find them than in recent years."

Other credit card averages:

  • The

    average student credit card rate rose to 15.13%, up from 15.03%

    last week.

  • Business

    credit card rates rose to an average 10.58% for standard cards

    and 12.81% for business reward credit cards.

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 12/22/05 (Modified 05/07/12)

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