Rate survey: Interest rates dip for first time in 10 weeks
Interest rates on new credit card offers dipped Wednesday
after remaining unchanged for 10 straight weeks, according to the
CreditCards.com Weekly Credit Card Rate Report.
|CreditCards.com's Weekly Rate Report
||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: Jan. 23, 2013
The national average annual percentage rate (APR) fell to
14.95 percent Wednesday. This is the first time since November that average
rates have changed. Unlike previous rate changes, however, this week's change
was due to a reshuffling of the CreditCards.com database, rather than to a new
APR on an existing card.
CreditCards.com occasionally replaces old cards with new
ones in order to more accurately reflect the current card market. This week, we
swapped two Citi cards that are no longer available online, the Citi Forward
card and the Citi Platinum Select Visa, with two cards that have similar
features: the Citi Thank You Preferred card and the Discover "it"
card. The slight difference in the cards' APRs caused the national average to
Discover introduces mortgage-centric
Credit card offers have remained remarkably stable in recent months, with
few issuers making big changes to the cards it offers new customers. However,
at least one issuer has remained busy, making significant changes to its
current card lineup -- and to the perks it offers customers.
On Jan. 2, 2013, Discover introduced its "it"
card and removed several older cards, including the Discover More card and the
Discover Open Road card, from its marketing pages online. Discover later
explained to CreditCards.com that the new card, which offers generous cash-back
rewards in rotating categories and doesn't charge customers a late payment fee
the first time a customer slips up, is intended to be the issuer's primary
flagship credit card.
Now, the issuer has shaken up its credit card offers further and introduced an unusual perk for new and current cardholders:
cash-back in exchange for their mortgage business. The one-time, cash-back bonus on appraisal
deposits is designed to reward customers for taking out a home loan with the
issuer's mortgage business, Discover Home Loan.
Cardholders who buy a new home or refinance an existing
mortgage with Discover Home Loan before April 16 will get a 5 percent cash-back
bonus if they use a Discover card to pay for an appraisal deposit.
Discover's mortgage-centric offer, introduced Jan. 16, is
unique in its use of credit card rewards to drum up business for mortgage
more missed payments
Discover is one of the few credit card issuers to make substantial changes
to its credit card portfolio in recent months. However, as the U.S. economy
continues to recover from the financial downturn, many issuers are still
fiercely competing for new customers, say experts, and are gradually offering
more cards to consumers with less-than-perfect credit scores.
Experts predict that issuers will continue to slowly ease
restrictions on new credit throughout 2013. During that period, late payments
on credit cards are also expected to increase.
Currently, late payments are at record lows as consumers
regain control over their finances. The total amount of outstanding credit --
meaning the amount of money that Americans still owe past a bill's due date -- for
example, dropped below $100 billion in the fourth quarter of 2012 for the first
time in 17 years, according to research released by Fitch Ratings on Jan. 22.
Credit card charge-offs -- payments that credit card issuers
have written off as uncollectible -- also fell in the fourth quarter of 2012,
according to Fitch Ratings' Credit Card Index.
That downward trend won't last long, however. "Consumers
resilience at keeping their debt in check while continuing to pay it down is
keeping monthly payments steady," said Fitch Managing Director Michael Dean in
However, as credit card issuers continue approving larger
numbers of applicants with less-than-pristine credit, missed payments will
inevitably rise, say experts. "Credit card charge-offs will plateau in the
near-term before inching upward during the second half of 2013," said Fitch's
Dean in a statement.
See related: Bankruptcies fell 14 percent in 2012, continuing two-year decline, Card balances pick up for second month
Published: January 23, 2013