Smart Borrower Blog

Credit Card Interest Rates Post 18-Year High

Jun 27th, 2018 @ 3:05 PM by Amber Nelson

American consumers are paying higher interest rates on their credit cards than they have in roughly 18 years, according to data from, and they may pay even more before the end of the year.

The average credit card rate today is 15.3%, based on information from’s, the highest level since 2000. Back then there was a 6 percentage point spread between credit card interest rates and the national prime rate, the rate which banks charge their most credit-worthy customers. That spread has now grown to 10.5 percentage points.

There are at least three factors at play when it comes to these high credit card rates. First, the Card Act of 2009 forbid card issuers from raising rates on existing balances until the cardholder was at least 60 days behind on their payments. In order to avoid the added risk of letting borrowers go a full 60 days late without an interest increase, card issuers have been increasing interest rates to new customers. In this way they hope to get money upfront from any future losses.

Second, the stiff competition among card issuers for business has led them all to spend millions of dollars more in rewards for their customers. American Express, Discover and Capital One gave out a combined total of $12.9 billion in reward payments in 2017, a 59% jump from 2011. In order to pay for those rewards, the card companies have raised interest rates even more.

And of course, national interest rates have been on the rise. Last week the Federal Reserve increased its target interest rate to a range of 1.75% to 2%, the highest level in almost 10 years. When the Fed raises rates, all other rates including those on mortgages, car loans and credit cards also get bumped up. After the Fed’s most recent rate hike, credit card rates are expected to move up to 15.5% from the current 15.3%. There are still two more likely Fed increases before the end of 2018, meaning credit cards rate may see even greater heights.

About Amber Nelson
Amber Nelson is a seasoned mortgage industry writer and a regular contributor to and

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