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With Thirteenth Straight Federal Increase, Credit Card Rates Rise Again

by Peter Andrew
With Thirteenth Straight Federal Increase, Credit Card Rates Rise Again

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On 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 cards.

(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.

Disclaimer:The information in this article is believed to be accurate as of the date it was written. Please keep in mind that credit card offers change frequently. Therefore, we cannot guarantee the accuracy of the information in this article. Reasonable efforts are made to maintain accurate information. See the online credit card application for full terms and conditions on offers and rewards. Please verify all terms and conditions of any credit card prior to applying.

This content is not provided by any company mentioned in this article. Any opinions, analyses, reviews or recommendations expressed here are those of the author’s alone, and have not been reviewed, approved or otherwise endorsed by any such company. CardRatings.com does not review every company or every offer available on the market.

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