Credit card rates are rising; how you can fight back

Array of credit cards

Annual percentage rates on credit card offers are on the rise.

We're talking record highs.

But if you're looking for a new credit card -- and you've got good credit -- there's no reason why you have to settle for a card that charges 15% APR.

That's about the national average on variable-rate credit cards, according to, the highest average rate since the website started tracking APRs four years ago.

Of course, this rate takes into account just the low end of the APR range -- available to consumers with better credit scores.

But it's no surprise that rates for people with lower credit scores are on the rise, too.

The average rate on the high end of the range is above 20%, an increase of more than a quarter percentage point since midsummer.

Why are rates going up?

It’s all about the economy and a response to legislation like the Dodd-Frank Act, which limited one of the issuers' revenue streams by capping debit card swipe fees, says John Ulzheimer, president of consumer education at

"The cost of complying with legislation is being subsidized by cardholders. Banks can either charge you more fees or charge you more interest," Ulzheimer says. "Fees are a lightning rod, as Bank of America’s (now abandoned) $5 debit card fee has shown, but interest rates are more easily swallowed by cardholders."

The nation's economic outlook remains uncertain, so credit card companies also are raising their APRs as a hedge so they'll still make money even if we fall into another recession and credit card activity declines.

The good news is that these APR rates won’t impact your current credit card balances. The Credit CARD Act forbids retroactive interest rate increases.

The CARD Act also prohibits card issuers from raising rates in the first year after a card is issued.

The bad news is that card issuers can still raise your rates on cards you've had for a while; they just must give you 45 days’ notice before doing so.

So pay attention to letters that arrive in the mail from your card company. It might not be just another solicitation.

If you’re looking to open a credit card right now, it’s even more important to pay attention to the APR you’ll receive.

"The cost to carry credit card debt will go up for newly opened cards," says Ulzheimer. "Balances will accelerate more quickly and therefore monthly payments will go up because they're a percentage of the outstanding balance. This underscores the importance of using credit cards for convenience, not for subsidizing a lifestyle."

Let's take the difference between the low and high average rates as an example of what a few percentage points can mean.

If you charged $5,000 on a new card today at 20.2% and paid it off at $150 per month, you would have to pay $7,404 to pay off the debt. That’s $900 more to pay than if you had a card at 15%.

Our credit card payoff calculator will show you how long it might take to pay down your credit card debt -- and what your interest payments might look like.

So, if you’re looking for a new card, what can you do to combat rising APRs?

If you’re like most Americans who are over big banks and their fee increases and rate hikes, ditch 'em and shop around.

"Keep in mind that there are over 10,000 credit card issuers in this country, most of them credit unions," says Ulzheimer. "If you shop around, you can easily find a card with an interest rate below 10% and possibly much lower."

Start with our 6 smart moves for finding the cheapest credit card. It will guide you in what to look for and what to avoid in a new credit card.

And don't forget to look for low interest credit card offers in our extensive database.

If you have a clean credit report and a FICO score of 700 or above, you should be able to grab a credit card with an interest rate well below 15%.

If your credit isn't as strong as you'd like, follow our 7 smart moves to boost your credit score to help achieve your goal.

You can also order free copies of your credit report from Keep track of your FICO score at

Regardless of what credit card you have and when you apply for it, the best advice is to pay your bill in full each month. That way, any APR increase will be completely irrelevant to you.

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