Last week, the interest rate on new credit cards fell for the first time since July. The Credit Card Rate Report looked at the top 100 most popular credit cards in the United States and found that the average annual percentage rate dipped to 14.99 percent, and balance transfer credit cards are offering APRs at 12.77 percent.
Though this interest rate for the average APR is a recent low, the rate is not far from its all-time record high, where it stood the first week in October. In fact, the average APR is 0.34 higher than rates were six months ago.
Overall, rates are trending higher than they were six months ago, except for instant approval credit cards, which stayed steady at 15.99 percent. Cash-back credit cards have seen the highest rise in APR. These cards have gone from 13.41 percent to 14.70 percent APR. Card types with the lowest overall rates are low interest (10.73%), Balance transfer (12.77%), and Business cards (13.13%). Topping the list were cards given to customers with bad credit, which averaged 24.96 percent.
Choosing a credit card often requires research, and because of this it’s important to consider a number of factors. The Federal Reserve runs a website and comparison tool that can help compare APRs side by side.
When choosing a credit card, don’t only compare the APR on purchases, but be sure to find out the APR for balance transfers, that is the interest that would apply to any credit card balances you move to your new credit card. Many cards also apply a different APR and interest rate for cash advances. Beware of penalty APRs as they apply as well.
Most cards give 28 days to pay a balance after it closes before applying any interest rate. There may be a minimum interest charge on the card – compare these particularly if you plan on only using the card occasionally. These cards charge you a small amount if you have not used the card. There are cards that do not include a minimum interest card and this option is best for people who will not use their card all the time.
Set-up and maintenance fees – such as annual fee, account set-up fee, participation fee, and additional credit card fee – should all be compared. These are more common with reward cards that give the opener of the card special privileges. Many cards come with transaction fees, such as balance transfer, cash advance, foreign transaction fees, as well as penalty fees that are hidden in the fine print. The most important thing to consider is how you will use the card and which aspects and perks will be most important to you.
