A recent survey by ValuePenguin found that the average annual percentage rate (APR) for credit cards ranges from 15.99 percent for travel rewards cards to 20.90 percent for cash back rewards cards. Meanwhile, you can get a standard 30-year mortgage today for around 4 percent.
The reason interest rates on credit card balances are so high is that the loans underlying those balances tend to default at a higher rate than other types of loans.
The Federal Reserve estimated earlier this year that 13.7 percent of the dollar amount of credit card loans at the nation’s biggest banks would go into default if the economy dives into a “severely adverse” economic downturn akin to the financial crisis. That compares to only 2.2 percent of the dollar amount of residential mortgages on big banks’ balance sheets.
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There are two reasons for this. First, it’s easier for people with lower credit scores to get a credit card than it is to get a mortgage. And second, credit card loans aren’t…
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