Average Credit Card Rate Tops 13 Percent
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Average Credit Card Rate Tops 13 Percent Tuesday’s hike in federal interest rates — the fourteenth straight hike from the Federal Reserve — helped push the average credit card interest rate past the 13 percent mark, according to the weekly IndexCreditCards.com Credit Card Monitor. Major credit card issuers including Bank of America, Citibank, National City, US Bancorp and Wells Fargo announced increases in their lending rates in response to the Fed hike, meaning another quarter-point bump for holders of these issuers’ variable-rate credit cards.
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 follow.
The average credit card rate for standard, non-reward credit cards jumped to 13.02% this week, while the rate for credit cards offering rewards passed the 14 percent mark, to 14.09%. The news is better for consumers with the very best credit — for them, these averages are 10.28% and 11.61%, respectively.
As always, college students who carry balances are paying more. The average APR for a student credit card moved to 15.59% this week.
For the first time in five weeks, the average business credit card rate also increased. However, the rise was slight, and business card rates remained far below consumer rates. Standard business credit cards offered an average APR of 11.37%, while business reward credit cards offered an average rate of 13.22%.
“It’s unclear whether the Fed hikes are over,” says Adam Jusko, Research Director for IndexCreditCards.com. “With Ben Bernanke officially taking over for Alan Greenspan as Federal Reserve chairman, predictions are varied as to his philosophy. However, most experts think we’ll see at least one more quarter-point hike in March, so if you’re carrying a variable-rate credit card, now’s the time to get it paid off.”
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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