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.

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.

About IndexCreditCards.com

IndexCreditCards.com offers credit card news, research, and perhaps the most comprehensive index of credit cards available on the Internet today, with a master listing of over 600 credit cards as well as categorized lists based on interest rates, reward programs, business credit cards, student credit cards and credit cards for those with poor credit histories.

Credit Card Monitor is a weekly survey tracking average credit card rates in multiple card categories. Credit Card Monitor information provided in this release may be reproduced free of charge, provided credit is given to http://www.IndexCreditCards.com.

Contact: Justin McHenry, 216.221.0312

Website: http://www.IndexCreditCards.com


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Justin McHenry