Listen up, cardholders: Make the most of teaser rates while they last. Credit card issuers are aggressively courting new customers with zero percent introductory APRs and balance transfer rates equally as low, but standard APRs have risen to within a hair’s-breadth of record highs, and this is in an economy of record-low borrowing rates for banks.
According to the most recent rate report from CreditCards.com, the national average APR crept up to 14.9 percent, just shy of the record 14.91 percent reached back in July, which was the highest average since the site began tracking APRs in 2007. This is a jump from six months ago, when the average was 14.77 percent. The increase is primarily coming from the cards that have some of the strongest appeal for consumers; APRs for cash back and reward cards both went up.
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In the case of cash-back cards, the rate has gone up more than 1.5 percentage points in just six months, a substantial hike. Conversely, the APR on low-interest credit cards has dropped in the past six months by more than a percentage point, down to an average of 10.73 percent. If you think you’re going to revolve a balance, even infrequently, it’s a better bet to go for a no-frills card than one that offers all sorts of perks, because the interest rate you’ll pay will more than cancel out the value of those rewards.
The analysis accompanying the report does point out that APRs today are generally much more stable than they were a year ago; 2010 was marked by rates going both up and down frequently, a result of issuing banks making frequent changes as Credit CARD Act compliance took place.