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