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Rate survey: Credit card rates hold steady

By Kate Tomasino

CreditCards.com's Weekly Rate Report
  Avg. APR Last week 6 months ago
National average 14.95% 14.95%
14.91%
Low interest 10.40%
10.40% 10.73%
Balance transfer 12.71%
12.71%
12.78%
Business 13.13%
13.13%
13.07%
Student
13.77%
13.77%
13.77%
Airline  14.54%
14.54%
14.31%
Cash back  14.61%
14.61%
14.16%
Reward 14.78%
14.78%
14.51%
Instant approval 15.49%
15.49%
15.99%
Bad credit 23.41%
23.41%
24.96%
Methodology: The national average credit card APR is comprised of 100 of the most popular credit cards in the country, including cards from dozens of leading U.S. issuers and representing every card category listed above. (Introductory, or teaser, rates are not included in the calculation.)
Source: CreditCards.com
Updated: Jan. 18, 2012

Interest rates on new credit card offers remained unchanged this week, according to the CreditCards.com Weekly Credit Card Rate Report.

The average annual percentage rate (APR) stayed at 14.95 percent, its lowest level since September. This week's lack of activity comes just a week after subprime issuer First Premier sent the national average tumbling by lowering the APR on its Gold MasterCard from 49.9 percent to 36 percent. Prior to that decrease, the national average had spent several weeks at or near its record high of 15.22 percent, which was set in mid-December.

Last week's move by First Premier sent the average APR for several categories of cards lower as well.

  • The average APR for a new offer on a low interest credit card is 10.40 percent, its lowest level since June 2009.
  • Balance transfer credit cards are at 12.71 percent, their lowest since September 2010.
  • Bad-credit credit cards are at 23.41 percent, the lowest seen since October 2010.

While rates were unchanged this past week, First Premier's move may be a sign of good things to come, economists say. "Based on the subprime lender lowering its rates to bad/limited/no-credit consumers, I would take that as a sign of an increased confidence in the overall economy and an increase in competition amongst creditors," said David Nice, associate economist at Mesirow Financial."With an improving economy, these less creditworthy consumers are less likely to default on their credit cards. Because of that lowered default risk, they become highly attractive to subprime lenders."

Other data provided reason for encouragement as well. A report by Keefe, Bruyette & Woods showed that the credit card charge-off rate decreased in December, as did the 30-day, 60-day and 90-day credit card delinquency rates. Meanwhile, a Moody's Investors Service survey projects that loan balances for six of the country's largest credit card issuers will grow in 2012 for the first time in four years. These loan balances are expected to grow about 6 percent -- to $517 billion -- after falling more than 5 percent in 2011.

Consumers are beginning to feel somewhat more confident in their ability to take on debt, Curt Beaudouin, vice president and senior analyst with Moody's said in the report. And while it may seem like the right climate to take on a new credit card or to transfer your credit card debt to a new credit card, it's always important to do your homework. When creditors decrease their rates to make an offer more attractive, they may also find a way to recoup lost revenue by increasing the fees they tack on.

"The issuer examines their target market and makes decisions based on a complicated set of numbers," said Gail Cunningham, spokeswoman for the National Foundation for Credit Counseling. "But of this you can be sure -- they know the threshold at which they can make money. Frankly, if a person does not qualify for credit at a standard rate, they probably should not be attempting to obtain credit."

See related: A guide to the Credit CARD Act of 2009

Published: January 18, 2012


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