Rate survey: Credit card interest rates remain at 15%
Rates stay steady, while consumers rebuild finances
By Kelly Dilworth | Published: September 26, 2012
The national average annual percentage rate (APR) on new card offers held steady on Wednesday after rising to 15 percent the previous week, according to the CreditCards.com Weekly Credit Card Rate Report.
|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: Sept. 26, 2012|
None of the cards CreditCards.com tracks featured rate changes this week. However, that's become the norm this year.
Interest rates on new credit card offers have remained exceptionally stable for the past two years. For example, the average APR on new card offers for 2012 has hovered around 14.9 percent all year. During the same period in 2011, average rates were just slightly lower, topping out at 14.79 percent.
The recent stagnation contrasts sharply with the rapid APR increases that followed the passage of the Credit CARD Act of 2009. Before its passage, between January 2009 and September 2009, average rates stood at 12.19 percent. The following year, average APRs during the same period climbed to 14.19 percent.
Experts say that while issuers still compete for new customers, they remain cautious about the credit they extend and have sharply curbed the number of card offers they send to consumers' mailboxes, according to the market research firm Mintel Comperemedia.
Consumers, meanwhile, are showing some signs that they're
willing to apply for new credit when they need it, according to research from the Federal Reserve. However, they're not ravenous, and aren't willing
to go overboard with the amount of debt they take on.
Consumers are financially
healthier, research shows
Consumers' unwillingness to spend in huge amounts has been a big drag on the economy in recent months. However, new research shows that consumers' cautious attitude toward debt has helped them repair their household finances and finish the year in a much stronger position than they were in last year.
"What we've found is the state of credit is improving slowly," says Rod Griffin, director of public education for the credit reporting agency Experian. "[People] are gradually reducing their debt loads," says Griffin. Consumers are managing their debts better and are regaining control over their finances, he says.
In a report released last week, Experian found that the national average VantageScore improved in 2012, the second straight year it has done so. The growth in average scores was small, rising from 749 in 2011 to 750 in 2012. However, Griffin says that the overall trend is positive. For example, the average number of late payments fell by 2 percent this year, while median family income rose by 1.23 percent.
Griffin likens consumers' gradual improvement in their finances to America's slow-chugging economic recovery. "People are rebuilding their personal economies much like nation is rebuilding the overall economy," says Griffin. "It's a slow recovery, but it seems to be a pretty steady recovery."
"That's not to say there aren't large numbers of people struggling tremendously," Griffin adds. "But on the whole we're seeing some real improvement."
New research from the credit reporting agency Equifax also found that consumers who are living in areas that are recovering from the recession at a more rapid clip, such as the Dallas-Fort Worth metro area and Washington, D.C., are also becoming more confident about the amount of credit card debt they take on.
The improvement hasn't been shared equally. Consumers living in areas that still have relatively high levels of unemployment, such as Las Vegas and Detroit, saw a small but statistically significant drop in credit card debt debt between 2011 and 2012, underscoring the fact that not all consumers are done shedding the debt they acquired before the recession.
"The differences between the metro areas illustrate the uneven nature of the economic recovery," said Equifax's Trey Loughran in a press release. "In places where the housing bust was the worst, such as Florida, California and Nevada, and in places like Detroit and Ohio where the recession was particularly deep because of a dependence on manufacturing, consumers are continuing to be prudent about using credit. In other pockets of the country, consumers are feeling a bit more confident to take on new debt."
Consumers more optimistic
Economists who say that consumers need to be spending more robustly in order to help push the economy forward have reason to hope, however. Consumers reported in September that they were feeling much more optimistic about the economy and about their own household finances, according to new research from The Conference Board, and that could eventually translate into a greater willingness to spend.
"Consumers were more positive in their assessment of current conditions, in particular the job market, and considerably more optimistic about the short-term outlook for business conditions, employment and their financial situation," said The Conference Board's Lynn Franco in a statement. "Despite continuing economic uncertainty, consumers are slightly more optimistic than they have been in several months," said Franco.
In fact, the last time this many consumers said they were feeling fairly optimistic about the future was in February, when the economy was adding jobs at a much higher rate.