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The average credit card interest rate inched higher this week, climbing to another all-time record high. The national average APR climbed to 17.52 percent, which is the highest weekly average CreditCards.com has recorded since it began tracking rates in mid-2007.
Chase spurred this week’s rate change by hiking the APR on its premier luxury card, the Chase Sapphire Reserve, by 1 percentage point.
Applicants are now offered a range of APRs starting at 19.24 percent and maxing out at 26.24 percent.
The Chase Sapphire Reserve card has earned cult status in rewards circles in recent years, thanks to its bountiful travel perks, such as a large annual travel credit and other high-value freebies, and a strong rewards program.
However, Chase has recently trimmed some of the card’s benefits and tweaked some of its terms, such as its starting APR. For example, like other Chase cards, it no longer offers price protection. It also caps the number of free guests you can invite into an airport lounge at two guests per visit. In addition, the card doesn’t start awarding bonus points on travel purchases until after you’ve used your travel credit.
The Chase Sapphire Reserve isn’t quite as generous as it was when it first debuted in 2016, but it remains one of the most highly praised travel cards on the market.
See related: Historic credit card interest rates chart
Other cards included in the rate report remain unchanged
Chase was the only issuer tracked by CreditCards.com to make changes this week.
Every week, CreditCards.com evaluates the APRs, promotional terms and annual fees of 100 U.S. credit cards.
None of the other cards included in the weekly rate report altered interest rates this week. Lenders also left promotional terms, such as interest-free balance transfer offers, unchanged.
Consumers could see more promotional changes in the future if issuers start using extra long interest-free promotional offers to compete for more customers.
A number of issuers have tweaked promotional offers in recent months in order to attract cardholders looking for a longer 0-percent promotion. U.S. Bank, for example, recently increased the interest-free promotional offer on its Business Cash Rewards card to 15 months – an unusually lengthy period for a business card. However, it clipped the U.S. Bank Visa Platinum Card’s promotional financing period from an industry-leading 20 months to 18 months instead.
An extended reprieve from rate hikes?
The Federal Reserve voted not to increase its federal funds rate at its January Federal Open Market Committee meeting, and borrowers could be getting an extended reprieve from rate hikes.
In a Jan. 30 statement, the FOMC said the committee would be “patient” with regard to further increases in its federal funds rate – a noticeably less aggressive tone than it struck during 2018, when it hiked rates by a quarter of a percentage point four times.
Ian Shepherdson, chief economist at Pantheon Macroeconomics, wrote in a Jan. 30 e-mail that the FOMC’s “excessively” dovish tone suggests it’s going “all in” on the narrative of a potential economic slowdown in 2019.
“In our view, this is very risky, and it means that if the economy holds up as well as we expect, policymakers will have to spin on a dime sometime around mid-year in order to avoid making a serious policy error,” Shepherdson wrote.
Fed Chairman Jerome Powell indicated after the Fed’s December 2018 meeting – the last time it hiked interest rates – that two rate increases were expected in 2019.
Fewer cardholders are getting approved for new accounts
Consumers are continuing to use their credit cards regularly, despite rising credit card interest rates. According to new research from the American Bankers Association, monthly card spending rose significantly in the third quarter of 2018.
However, consumers don’t appear to be opening new cards at nearly as fast a clip. ABA’s study showed consumers opened significantly fewer credit cards in the past two years than they did previously – thanks in part to fewer prime and subprime cards getting approved.
“There is evidence that issuers may be starting to pull back a bit,” said ABA’s Jess Sharp in a news release.
Lenders did approve larger credit lines in the third quarter for consumers with subpar scores. According to the ABA, the average credit limit for new cardholders with subprime credit scores rose by 2.4 percent in the third quarter, while the average credit line for ongoing customers with subprime cards rose 2.6 percent.
However, lenders continue to be cautious about how much credit they’re willing to give consumers with blemished histories. For example, the average credit line on new subprime credit cards is currently $2,672. Meanwhile, the average credit line for all subprime accounts is $3,790.
Consumers with the best credit scores, meanwhile, are seeing slightly smaller credit limits when they open a new card. Average credit limits for new super prime credit card accounts fell 1.2 percent in the third quarter to $10,300. Meanwhile, average credit limits for all super prime accounts remained relatively flat, rising by just 0.1 percent to $11,671.
CreditCards.com’s Weekly Rate Report
|Avg. APR||Last week||6 months ago|
|Methodology: The national average credit card APR is comprised of 100 of the most popular credit cards in the country, including cards from dozens of leading U.S. issuers and representing every card category listed above. (Introductory, or teaser, rates are not included in the calculation.)|
|Updated: Jan. 30, 2019|