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Average credit card rates across categories. News as Business reward credit card rates spike

Average credit card rates across categories.  News as Business reward credit card rates spike

Current Averages:

  • Average consumer credit card rate, overall market: 16.77%
  • Average credit card rate, non-reward consumer cards: 15.15%
  • Average reward credit card rate: 17.46%
  • Average student credit card rate: 16.23%
  • Average business credit card rate (non-reward): 14.72%
  • Average business reward credit card rate: 16.03%

Credit card rates offered to consumers for new accounts fell by a hair in the last two weeks, while rates for business and student credit cards remained the same, according to the latest rate survey by IndexCreditCards.com.

Consumer credit card rates

The average consumer credit card rate was 16.77 percent, down from 16.79 percent two weeks ago. The drop in overall rates was due to a decline in rates for non-reward credit cards, which fell to 15.15 percent from the previous survey’s 15.22 percent. Reward credit card rates, which came in at 17.46 percent for consumers, stayed where they were, as did rates for student credit cards and business credit cards.

In the last six months, overall consumer credit card rates have remained within a narrow band: 16.74 percent to 16.85 percent. The rapid ratcheting up of rates the market saw a year ago when issuers were preparing for the onslaught of new federal credit card regulations appears to have subsided. Last year, the overall consumer credit card rate jumped from 14.99 percent in August 2009 to 16.36 percent in December 2009, according to IndexCreditCards.com surveys. The average rate peaked in February this year when it hit 16.85 percent.

Business credit card rates

Although they didn’t budge in the last two weeks, business credit card rates have risen in recent months. The average rate for non-reward business credit cards was 13.75 percent at the end of April, compared to today’s 14.72 percent. The average business reward credit card rates in April was 15.74 percent, compared to this month’s 16.03 percent.

This is particularly troubling, considering business credit cards don’t have the same protections as consumer credit card accounts, which are regulated under the Credit CARD Act. The law, the bulk of which took effect this year, bars credit card companies from raising interest rates on existing balances and new purchases during the first year of an account. It also ended some of the industry’s most consumer-unfriendly practices, such as applying payments to balances with the lowest interest rates first (such as purchases), instead of those with the highest rates (such as cash advances).

Student credit card rates

Student credit card rates, meanwhile, have declined only slightly in the last six months. The average student credit card rate was 16.27 percent at the end of April, versus the current average of 16.23 percent. Still, student rates have risen in the last year. In November 2009, the average student credit card rate was just 15.33 percent, almost a full percent point lower than today’s average rate.

When calculating average credit card rates, IndexCreditCards.com accounts for all the rate tiers offered for each credit card in the survey. Often issuers charge three or four rates for a single card, depending on the creditworthiness of the applicants. Consumers with high credit scores are offered the lowest rates, and those with troubled credit histories are offered the highest rates. The highest rates for credit cards included in the IndexCreditCards.com survey exceed 20 percent.

Credit cards included

Financial institutions represented in the IndexCreditCards.com survey include American Express, Bank of America, Capital One, Chase, Citi, Discover, HSBC, PNC/National City, Iberia Bank, Simmons National Bank, U.S. Bank, Wells Fargo, and more.

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