Average Credit Card Interest Rates (APR) 2019 - Elite Personal Finance
Credit Cards

Average Credit Card Interest Rates (APR) 2019

EPF January 30, 2019

Elite Personal Finance team conducted a study to determine the average credit card interest rates among different card types. From our findings we created a study below to help you understand the typical interest rates for the card, this guide shall also help you compare your currents or potential APR with the national population. Our data will further help you take the next step in your attempt to lower your interest payments if you’re carrying a balance on your card. We will look at:

  • Average Interest Rates by Credit Card Type
  • Average Intro APR Duration
  • Average Credit Card Penalty Interest Rates

Before getting to the core our discussions, let’s ask ourselves a few questions like:

What is The Meaning of APR?

Annual Percentage Rate, commonly APR is a percentage representation of the amount you will pay in interest annually. Think of APR as the price paid to borrow the money you need to make a big purchase.

Well, What is The Average APR on a Credit Card?

Every month, Elite Personal Finance releases a countrywide average APR, as at mid-year of 2017, our release of the national average credit card rate across all types of cards stood at 15.96 percent.

This statistic, however, doesn’t tell the whole story because the average credit card APR is different depending on different cards. Travel rewards and cash back cards, for instance, will generally come with higher APRs because of the benefits.

Note Important tips;

The lower your credit, the higher your APR”.

“Cards for people who need to work on their credit come with hefty APR”

Capital One® Secured Mastercard®, for instance, has a variable APR of 26.99% in the case of purchases and transfers, while Indigo® Platinum Mastercard® has a slightly better APR of 23.90% for purchases.

For example, Indigo® Platinum Mastercard®, is a card that targets people with less-than-perfect credit scores.

To What Extent Does a Credit Card’s APR Matter to You?

APR must not be a  primary concern for those who pay off their balance in full each month and don’t miss any payments. Instead, it will be better off to look for a card that offers the best cash back, rewards and bonuses which matches your lifestyle.

However, if you have the tendency of carrying a balance from month to another, then choosing a low-interest credit card could save you a substantial amount on interest which helps you pay off the balance faster.

Here’s what you should look for when trying to compare offers and determine the lowest rate available :

  • Promotional APR. Several cards offer an introductory Average Percentage Rates, usually 0% on purchases or balance transfers anywhere from a few months extending to a year. As much as it can be helpful, ensure you read the terms and conditions and clear your balance before the APR jumps up to its regular rate.
  • Regular APR. Most cards after the introductory period offer a range of variable APRs depending on your creditworthiness. As earlier stated, the lower end of the APR range is for consumers with good to excellent credit, and the reverse applies to consumers with bad credit scores. The issuer will determine your rate when you apply. Therefore, looking at your credit scores before applying may give you some insight on what to expect.
  • Cash advance APR. Generally, Banks and issuers impose higher rates for cash advances, and interest builds up the moment you take the advance — there’s no grace period here. Hence, we recommend avoiding credit card cash advances whatsoever.
  • Penalty APR. Don’t miss a payment, because if you do,  the credit card company may raise your rate on top of charging you a late fee- adding insult to an injury.

Note: We look at the offers in details later in the study.

What’s The Average Credit Card Interest Rate 2019?

The average credit card interest rate hit an all-time high this week, coming within a touching distance of 18% for the first time on record.

At the time of writing this study, the national average APR sat at 17.51 percent – more than a full percentage point higher than last year. Furthermore, the average maximum APR also increased in the wake of this week as lenders continued extending the range of APRs advertised on new offers.

The average maximum APR at the moment stands as high as 24.86 percent. At the same time, the average median card APR – which is the closest to what many cardholders are charged, has shot up to 21.19 percent.

What is The Average Interest Rate on Different Credit Cards?

As earlier stated, the national average for credit card interest rates is well over 17%, despite this, the averages for different categories can be very much lower or higher. For instance, low interest is about 14%, while bad credit is close to 25%. Here are some of the common categories, with their average rates:

 

Credit Card Category Average APR Last week About 6 months ago
National average 17.51% 17.47% 16.96%
Low interest 14.53% 14.52% 13.85%
Cashback 17.62% 17.56% 17.19%
Balance transfer 16.70% 16.67% 16.21%
Business 15.09% 15.07% 14.59%
Student 17.79% 17.79% 16.48%
Airline 17.39% 17.32% 16.91%
Reward 17.47% 17.42% 17.03%
Instant Approval 19.99% 19.92% 19.22%
Bad Credit 24.96% 24.96% 23.90%

Average Intro APR Duration

Retail cards rank among the highest in terms interest rates, much as they have benefits like the loyalty rewards, they will many a time require lower credit. After numerous studies and surveys, we determined that Retail cards had an average rate of 25.64% in the early days of January 2019.

Today, most credit cards offer a 0% introductory APR period on purchases made. The period differs for every card, like 6 months or 12 months during which you won’t pay any interest on your credit card balance provided you keep making the minimum payments.

After the conclusion of the introductory period, the interest rate switches over to the regular purchase APR. At this point, your balance becomes a subject to a new interest rate.

It is important to note that you MUST make minimum payments every month throughout the introductory period, failure to which leads to you losing your 0% rate and be switched to the regular APR. It’s possible that you get an even-higher penalty APR.

Average Credit Card Penalty Interest Rates (APR)

The penalty rate sometimes referred to as the default rate, is the rate payable on your card upon failing to make timely payments. Usually, the penalty rate is significantly higher than the rate offered initially on your credit card. After the introduction of the CARD Act, companies have the go-ahead to raise your APR but only 30 days after defaulting your payments. Many other factors may cause you to incur the penalty, it all depends on your credit card company. These factors include but not limited to: eclipsing your credit limit or defaulting on another account with the similar issuer.

Note that the maximum acceptable interest rate on any credit card is 29.99%

 

Company Penalty Interest %
Citi 29.99
Chase 29.99
American Express 27.24
Barclays Card 27.24
Capital One 29.4

 

From the above data, the penalty/default rates stand at the minimum 7-8% higher than the worst possible that is applicable on your credit cards. With an excellent credit profile, the rates can be up to 20% higher than the originally offered rate on your card. Pay on time! That’s the best advice we can provide you with.

Bottom Line

If you’re hoping to get a better deal, we all are, after all,  take the necessary steps to improve your credit by making timely payments and offsetting your debt.

As a matter of fact, with interest rates rising, it’s probably the best idea to pay your debt as quickly as you can. With the ever rising rates – debts are bound to become more expensive.

Elite Personal Finance

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