Average card APR remains stuck at 14.89 percent
By Kelly Dilworth | Published: January 28, 2015
|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: Jan. 28, 2015|
Interest rates on new credit card offers didn't budge this week, according to the CreditCards.com Weekly Credit Card Rate Report.
The national average annual percentage rate (APR) remained fixed at 14.89 percent Wednesday for the fourth consecutive week.
Most issuers left credit card terms alone as well.
Fifth Third Bank sweetened promotional terms on the Fifth Third Bank Platinum MasterCard. Applicants now have 15 months to take advantage of interest-free purchases and balance transfers instead of 12.
Meanwhile, Capital One eliminated the $19 annual fee on the Capital One Platinum credit card for consumers with average credit. However, applicants who qualify for the card are still charged a 24.9 percent APR.
The average APR for consumers with bad credit, by contrast, is currently 22.73 percent. The average maximum APR on new credit card offers is 21.23 percent.
Lenders forecast more debt, delinquencies ahead
After years of cautious lending, issuers have made it easier in recent years for consumers with average credit scores to qualify for a new card. But according to a January 2015 survey of credit risk professionals, many lenders are concerned that stagnant wages and persistent income inequality could make it harder for some consumers to pay their bills.
Those interviewed by the Professional Risk Managers' International Association said that the growing wealth gap in North America threatened to derail a significant number of consumers' credit scores and that could have a significant impact on consumer lending. For example, nearly a quarter of respondents said that has already prompted their institution to change their underwriting standards. Just over 11 percent said that the disparity in people's incomes, fueled by sluggish wages, is a bigger threat to credit availability than unemployment, consumer debt or interest rates.
Not all lenders, however, are equally pessimistic. For example, almost 39 percent of credit risk professionals expect credit card delinquencies -- late payments by 30 days or more -- to remain near historic lows throughout the first half of 2015, while approximately 37 percent predict late payments will increase slightly. Just 2 percent think the card delinquency rate will increase sharply in the months ahead.
Lenders do expect consumers to carry significantly more debt, but they don't think that will stop issuers from granting them even more. For example, more than 57 percent predict that card balances will swell over the next six months, while nearly 40 percent believe that consumers will be able to access more credit if they want it.
Many in the lending community are also increasingly bullish about the number of applicants applying for new cards and other lending products and are confident that issuers will manage to avoid tightening their standards. Almost 55 percent of credit risk professionals think that they'll see more credit applications this year than they did in 2014. Nearly 58 percent think consumers will ask for larger amounts of credit and slightly more than 30 percent think the approval rate for new credit will continue to improve.
In addition, nearly 60 of credit risk professionals are optimistic that most creditworthy individuals who want a new card will be able to get one.
In a recent blog post highlighting the new survey, FICO chief economist Andrew Jennings said that the survey's results underscore the positive impact the economy is having on lending. "We're seeing the effects of 58 straight months (and counting) of job growth," wrote Jennings in the Jan. 21 blog post. "That kind of job growth means more people have money to spend. More people feel comfortable borrowing. More banks feel comfortable lending."
However, not all consumers are in a position to financially benefit from the improvement. "Along with that good news, it is almost certain that some consumers will lean too far out over their skis and get into financial trouble," added Jennings. "And it also means people who aren't able to benefit from the economic expansion are at risk of falling much further behind financially."
See related: Fed keeps rates low amid mixed economic signals