Rate survey: Credit card rates' holding pattern continues
By Kate Tomasino
|CreditCards.com's Weekly Rate Report|
|Avg. APR||Last week||6 months ago|
|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.)|
|Updated: Feb. 22, 2012|
The average interest rate on a new credit card offer remained unchanged, according to the CreditCards.com Weekly Credit Card Rate Report.
For the fourth straight week, the average annual percentage rate (APR) stood at 14.91 percent, its lowest level since August 2011. It's the sixth time in the first eight weeks of the year that rates have gone unchanged.
When rates have moved in 2012, they have fallen -- once in January and once in early February. Dating back to late 2011, we have gone 10 straight weeks without seeing a week-to-week increase in the national average APR -- the longest such stretch since CreditCards.com began tracking rates in 2007.
The last increase we saw was in mid-December, as rates jumped from 14.98 percent to a record 15.22 percent. That increase was the largest in more than a year.
The rate dip means real money for those looking to sign up for a new credit card. A cardholder who borrows $5,000 on a credit card today and consistently pays $150 per month at 14.91 percent would have to pay $1,496 in interest to pay off the debt. That's $33 less had cardholders applied for a credit card at the beginning of the year when the national APR average was 15.14 percent. (Calculator: How long will it take to pay off your credit card balance?)
Gradually decreasing interest rates aren't the only positive news for cardholders. Credit bureau TransUnion said the national credit card delinquency rate -- the number of cardholders who are currently 90 days or more past due with a payment -- fell nearly 5 percent in the fourth quarter of 2011, compared to the same period in 2010.
Cardholders also received more credit last year, the TransUnion report showed. The number of new credit cards in 2011 grew by more than 14 percent compared to 2010. Twenty-five percent of those new cards went to consumers with a VantageScore of less than 700 -- so-called subprime borrowers. (VantageScore uses a range of 501 to 990. The more-popular FICO credit score uses a range of 300 to 850.) In 2010, that number was 21.8 percent. That marks a reversal from trends seen during the height of the recession, when wary credit card issuers focused their sights on only the least risky borrowers.
"We have seen a shift toward nonprime borrowers beginning in the second half of 2010 and continuing through the fourth quarter of 2011, which makes the current low delinquency rates even more remarkable," TransUnion spokesman Ezra Becker said in the report.
See related: VantageScore turns 5: what it is and why it matters
Published: February 22, 2012
- Poll: Americans sleeping better as economy recovers – A scientific survey commissioned by CreditCards.com finds money worries don't keep us awake as often, but retirement and education still make for sleepless nights ...
- Payment method statistics – Cash is fading, plastic rules and alternative payment methods are on the rise, according to the latest data on how we pay for things ...
- Fed: April credit card balances shoot up – Credit card balances shot up sharply in April, the Federal Reserve said Friday ...