Rate survey: Credit card rates remain at 15% for fifth straight week
By Kelly Dilworth | Published: October 17, 2012
Interest rates on new credit card offers remained at 15 percent Wednesday, 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: Oct. 17, 2012|
This week marks the fifth straight week that the national average annual percentage rate (APR) on new card offers has remained at 15 percent. It's also the 13th consecutive week that average rates have hovered just above 14.96 percent.
None of the cards featured rate changes this week. That's become the norm in today's placid card climate. Since Jan. 1, average APRs on new card offers have remained the same 28 weeks out of 42.
For the past two years, issuers have largely refrained from making big changes to credit card interest rates. For example, the average APR for all of 2012 is currently 14.95 percent. During the same period in 2011, the average APR for the year clocked in at 14.8 percent.
Experts say the soft economy and consumers' unwillingness to take on significant amounts of debt until they shed what they already have is creating an uncertain climate for card issuers.
Until the economy rebounds more forcefully, card issuers are unlikely to go after new customers as aggressively, say experts, and credit card terms are likely to stay relatively tight (which in industry-speak means tougher on consumers) for some time.
Late payments up slightly
One bright spot for credit card issuers in the past few years has been a steady decline in the number of cardholders who are missing payments on their credit cards.
The drop in the number of cardholders falling behind on their bills has made it easier for issuers to trust that a healthy number of new and current credit card customers are financially stable enough to pay at least the minimum amount due on their cards, despite ongoing economic uncertainty.
That trend came to a halt in September, however, when five out of seven major credit card issuers saw late payments on credit cards rise, according to multiple reports.
The bump in the number of cardholders who missed payments by 30 days or more was slight and delinquencies overall are still down since last year, said analysts at the financial services firm Keefe, Bruyette and Woods in a research note released Oct. 15.
Among the top six credit card issuers, Chase, Bank of America, Capital One, Citi, American Express and Discover, Citi was the only major issuer to see delinquency rates decline. That said, all six banks have seen big drops in the number of cardholders missing payments since this time last year.
Charge-offs (which are late payments that banks have lost hope of ever recovering) took a different course, falling in September for the third straight month. Overall, credit card charge-offs are down significantly since 2011, according to data published by Keefe, Bruyette and Woods.
Both charge-offs and delinquencies have dropped sharply since 2010, which is welcome news for both consumers and banks. The steep decline in the number of households that can't pay their bills underscores the fact that consumers' finances are substantially healthier than they were in the immediate aftermath of the recession, despite a weaker-than-expected economic recovery.See related: 6 reasons to break up with your credit card