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Rate survey: Credit card interest rates decline

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Credit card interest rates dropped to their lowest level since February, according to the CreditCards.com Weekly Rate Report.

CreditCards.com's Weekly Rate Report
  Avg. APR Last week 6 months ago
National average 14.96%
15.00%
14.97%
Low interest 10.40%
10.40% 10.73%
Balance transfer 12.58%
12.60%
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 14.77%
14.83%
14.61%
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: April 4, 2012

The national average annual percentage rate (APR) on new credit card offers dipped to 14.96 percent Wednesday. This is the fifth time this year rates have declined. However, unlike previous changes, this week's rate change was due to a reshuffling of the CreditCards.com database.  

Each week, the CreditCards.com team tracks 100 of the most popular credit cards in the country and looks at whether APRs, annual fees and promotional APR offers have changed.  Occasionally, we will reshuffle the cards that we look at in order to more accurately reflect the credit card market.

This week, we removed from our database four cards that were no longer available online and replaced them with an equal number of similar credit cards. One of the new cards -- the True Earnings credit card from Costco and American Express -- featured a lower APR than its predecessor, the Citi Platinum CITGO MasterCard. As a result, the national average declined slightly.

None of the cards that we track featured APR changes this week. However, we did see a few notable changes to credit card terms and conditions.

For example, Pentagon Federal Credit Union sweetened the promotional balance transfer offer on two of its rewards cards, the Pentagon Federal Credit Union Promise Card and the Visa Platinum Cash Rewards card. Both cards previously advertised low promotional APRs for 24 months. Now, the two cards feature a 4.99 percent balance transfer offer for the life of the balance.  

These are the only cards in the CreditCards.com database that feature a lifetime promotional balance transfer offer. Among the cards that we track, the second longest promotional balance transfer offer extends for just 18 months. Pentagon Federal Credit Union declined to comment on the change.

Thinking about a promotional balance transfer offer? Do the math before you apply
Promotional balance transfer offers are relatively common, according to CreditCards.com data. Roughly a third of the cards we track feature some type of promotional balance transfer offer and most offers extend for 12 months or more.  

However, experts recommend that consumers who are thinking about taking advantage of these offers add up the total cost of transferring a balance before filling out an application. "Before doing a balance transfer, review the balance transfer fee printed on the card's disclosure," says Karen Carlson, director of Education for InCharge Debt Solutions, a nonprofit consumer credit counseling service.

Many balance transfer cards charge up to 3 percent to transfer your balance and that can add up fast, says Carlson. "If you are transferring $10,000 and the fee is 3 percent, you are paying $300 from the get-go."

It's also a good idea to review your budget before you switch cards. "Have an end game in mind," says Carlson. Calculate how much you would need to pay monthly to clear your balance before the promotional rate expires and realistically assess whether you can afford it. "If you are fairly certain you can't pay your debt off during the introductory APR, compare your current interest rate against the potential card's regular rate," says Carlson. You may find that you are better off sticking with your current card.  

See related: 2012 survey of balance transfer cards shows offers getting better

Published: April 4, 2012


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