Average Credit Card Rates – May 2018

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average-card-rates225The current average credit card rate for the overall market is 20.20%, an all-time high in our survey (which began in April of 2014), and the second month in a row that the average rate has eclipsed 20%. Last month’s average calculated card rate was 20.12%.

Over the past several months we’ve seen major credit card companies raising rates to match the recent Federal Reserve rate hikes, but we’ve also seen general rate increases unrelated to these Fed hikes. (Most credit cards have a variable rate that moves up and down in line with Federal interest rates, but issuers can re-price their rate structures for new customers at any time.)

The current 20.20% average rate includes both bank credit cards and retail credit cards, and it reflects the average for new card applications, not the rates being paid by current customers on older cards. See below for further breakdowns of rate averages by category.

Comparing current rates to the past, the average credit card rate at this time last year was 19.34%, almost a full point lower than today’s average. Going back two years, the average rate in May of 2016 was 18.72%. In May of 2015 it was 18.18%.

Our monthly average rate takes into account a range of mass market cards (Visa, MasterCard, American Express, Discover), as well as the retail store cards that many consumers also hold. Below you’ll find current average rates broken out into several card categories:

  • The average rate for bank credit cards (i.e., removing retail store credit cards from the equation) is 19.32%, up from last month’s 19.23% figure. In May of 2017 the average was 18.37%.
  • The average rate for low interest credit cards with no rewards increased to 18.05%, the first time this number has hit the 18% mark. Last month’s average was 17.94%. (The average rate in this category in May of last year was 17.03%.) This category has moved up faster than any other over the last year — forgoing rewards does not provide as much interest rate relief as it did in the past.
  • The average rate for rewards credit cards rose to 20.33%, up from last month’s 20.25%. (Last year’s average rate at this time: 19.43%.)
  • The average rate for department store / retail credit cards increased to 23.72% this month, up from 23.65%. The retail credit card average at this time last year was 23.19%.
  • In June of 2017 we began tracking average rates on business credit cards. The current average interest rate on business credit cards is 17.97%, up from the 17.87% rate calculated last month.

rahulgandhi computes these averages by tracking a representative pool of credit cards across all segments over time. Credit cards offered by major credit card companies as well as smaller banks are included, though more weight is given to cards issued by the larger banks that make up the vast majority of credit cards in circulation. The averages listed represent what a consumer could expect to see if applying for a new card now, not the rates of existing card accounts issued in the past.

In computing average rates, rahulgandhi attempts to account for the multiple rate tiers at which consumers may be approved for many cards. For example, Chase may approve new holders of its Slate credit card at a rate anywhere from 16.49% to 25.24%.

If you would like further information about our rate calculations, or would like commentary on the current rate market for a news story, contact [email protected].