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Rate survey: Move by Barclays pushes card rates higher

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Credit card interest rates jumped on Wednesday for the second week in a row, according to the CreditCards.com Weekly Credit Card Rate Report.

CreditCards.com's Weekly Rate Report
  Avg. APR Last week 6 months ago
National average

15.02%

14.97%
14.96%
Low interest 10.40%
10.40% 10.73%
Balance transfer 12.63%
12.50%
12.77%
Business 13.13%
13.13%
12.91%
Student
13.77%
13.77%
13.77%
Cash back  14.45%
14.45%
14.34%
Airline  14.63%
14.63%
14.44%
Reward 14.84%
14.79%
14.59%
Instant approval 15.49%
15.49%
15.99%
Bad credit 23.64%
23.64%
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: March 14, 2012

The national average annual percentage rate (APR) on new credit card offers rose to 15.02 percent, marking the second time this year that interest rates have risen above 15 percent.

Average interest rates began on a high note the first week of 2012, hovering just above 15 percent. But then they dropped significantly in the second week of the year and continued to either drop -- or stay the same -- for the next seven consecutive weeks. That gave consumers hope that rates on new card offers would continue to decline. However, those hopes were dashed last week when the national average rose for the first time in 2012. 

The last two weeks of consecutive rate increases is bad news for new cardholders who expect to carry a balance on their cards. Average interest rates have hovered near record highs since mid-December, when they shot up above 15 percent for the first time since CreditCards.com began tracking rates in mid-2007.

As a result, new cardholders can expect to pay significantly more on their balances than they did a year ago, when the national average was 14.65 percent.

To get a sense of just how much more new cardholders have to pay these days, consider this: If a cardholder borrows $5,000 on a credit card today and consistently pays $100 per month at 15.02 percent interest, they will have to pay $2,904 in interest to clear their balance. That's $137 more than they would have had to pay a year ago when average interest rates were significantly lower. (Calculator: How long will it take to pay off your credit card balance?)

Barclays spurred this week's interest rate change by tweaking its offer on the Carnival World MasterCard. The bank increased the bottom end of the card's APR range from 10.74 percent to 13.99 percent, prompting the national average to rise.

Barclays also decreased the top end of the Carnival World MasterCard's APR range from 21.74 percent to 20.99 percent. However, because CreditCards.com only considers the lowest possible APR when calculating rates, this decrease did not affect the national average.

Barclays spokesman Kevin Sullivan confirmed the change, but did not respond to a request for comment.

Experts say that rates may be getting higher, especially on rewards credit cards, but in exchange, the perks are getting better. "The APR rates are getting higher and the rewards are also getting higher as well," says Roy Persson of the market research firm Synovate.

For example, according to Persson, issuers have begun ramping up sign-up bonuses as they compete for new cardholders. That includes offering higher cash-back amounts, more bonus points and extra perks, such as airline credits on standard rewards cards.  

Correction: Due to information erroneously left on the Barclays.com website, we stated that 0 percent balance transfer offers for the US Airways Premier World MasterCard and the NFL Extra Points Visa had been reduced from 15 months to 6 months. However, the company now states that both cards continue to feature balance transfer offers for 15 months. 

 See related: Economy brightens, but not enough for the Fed to raise rates

Published: March 14, 2012


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