Rate survey: Average card rate holds steady at 15.16 percent
By Kelly Dilworth | Published: February 24, 2016
The average credit card interest rate stayed at 15.16 percent Wednesday for the third consecutive week, according to the CreditCards.com Weekly Credit Card Rate Report.
None of the issuers included in the rate report tweaked interest rates. Issuers left promotional APRs unchanged as well.
This is the first week since November 2015 that all 100 cards tracked by CreditCards.com advertised the same rates and promotional offers. Since early December, more card issuers than usual have tinkered with terms.
Most issuers increased rates by 0.25 percent after the Federal Reserve announced in mid-December it was increasing the federal benchmark interest rate by the same amount. Some issuers also implemented more dramatic changes. For example, Pentagon Federal Credit Union increased the Promise card’s APR by more than 2 percentage points. Meanwhile, Credit One cut the Platinum card’s APR by nearly 3 percentage points.
Card offers get less generous
As interest rates increased on most new card offers, card issuers also clamped down on promotional offers in January and shortened the amount of time cardholders could take advantage of a 0 percent interest rate.
According to the financial services company CreditSuisse, the average balance transfer period fell to 13.9 months in January -- down from an average of 14.1 months in December and 14.3 months during the same time last year.
The number of offers that included a 0 percent balance transfer rate also dipped between December and January. Last month, issuers mailed roughly 249 million interest-free balance transfer offers -- 2 million fewer than in December.
Consumers also received fewer mailings advertising a 0 percent interest rate on purchases. According to CreditSuisse, just 65 percent of offers mailed in January -- 245 million total -- advertised an introductory APR on purchases, down 5 percent from December when issuers mailed 264 million interest-free purchase offers.
Card issuers still lean heavily on 0 percent interest rates to lure new cardholders. But compared to previous years, issuers appear to be tightening their grip on the amount of free credit they’re willing to lend.
For example, ultra lengthy balance transfer offers that extend for more than 15 months declined significantly in 2015, according to data provided by CreditSuisse, after appearing more frequently the previous year. In 2014, for example, average balance transfer periods peaked at nearly 20 months over the summer before dropping back down to an average of around 14 months in the fall.
Despite cutting back on the generosity of some promotional offers, card issuers are sending more credit card offers overall, which analysts say is a good sign that competition is increasing.
In January, consumers received 360 million new card offers -- 17 percent more than they received the previous year.
“We believe that competitiveness remains high and will continue to ramp up in 2016,” wrote research analysts Moshe Orenbuch and Serena Hong in a Feb. 22 research note.
|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: Feb. 24, 2016|
See related: Survey: Millions stay loyal to a single card forever