Weekly Averages:

• Average consumer credit card rate, overall market: 13.86%
• Average credit card rate, non-reward consumer cards: 12.40%
• Average reward credit card rate: 14.48%
• Average student credit card rate: 14.22%
• Average business credit card rate (non-reward): 10.18%
• Average business reward credit card rate: 11.80%

Though many credit card companies are raising interest rates and changing rate formulas to protect profitability, the recent Federal Reserve rate cuts have still been strong enough to knock average rates down, at least a little. (Federal Reserve rate cuts affect the rates on variable-rate credit cards, which include about 70% of all cards issued.)

The average credit card rate across all consumer credit card types and credit histories is 13.86% this week, down slightly from 13.88% previously.

The average credit card rate for non-reward consumer credit cards actually increased slightly, to 12.40% from 12.37% previously, yet the average rate on credit cards with rewards fell, down to 14.48% from 14.53%. Having rates on non-reward cards rise while reward card rates fall is a rare occurrence. However, the cuts in reward card rates may be coinciding with decreased rewards from many cards. Cash-back cards in particular are becoming less generous.

The averages listed above attempt to take into account the multiple tiers that many credit card issuers offer, instead of accounting for only the lowest listed rates. However, IndexCreditCards.com also tracks the very lowest listed rates, those reserved for customers with the very best credit. This week those averages are 10.99% (previously 11.26%) for the market as a whole, with a 9.11% (previously 9.15%) average for non-reward cards and a 11.79% (previously 12.16%) average for consumer cards with rewards. This reflects a significant decrease in rates for those with the very best credit — these are the customers that credit card issuers currently crave the most, as the economy has caused more and more of the less credit-worthy consumers to default on their balances.

In the current market, it is surprising to see student credit card rates continue to drop. The average rates on student cards fell to 14.22% this week, a significant drop from 14.45% less than three weeks ago. While published rates do not necessarily reflect how many students are actually being accepted at these low rates, it is still surprising that the card companies have not re-worked rates to the upside.

Small business credit card rates dropped this week also, with the average rate for non-reward business credit cards falling to 10.18% from 10.43%, and the average rate for business credit cards with rewards declining slightly, to 11.80% (from 11.83%).

Financial institutions represented in the survey include Advanta, American Express, Bank of America, Capital One, Chase / Washington Mutual, Citi, Discover, National City, Pulaski Bank, U.S. Bank, Wells Fargo, and more.

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