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Rate survey: Credit card interest rates hold at 14.95 percent

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Interest rates on new credit card offers remained static Wednesday, according to the CreditCards.com Weekly Credit Card Rate Report.

CreditCards.com's Weekly Rate Report
  Avg. APR Last week 6 months ago
National average 14.95%
14.95%
14.98%
Low interest 10.29%
10.29% 10.40%
Balance transfer 12.59%
12.59%
12.62%
Business 13.13%
13.13%
13.13%
Student
13.16%
13.16%
13.16%
Cash back  14.13%
14.13%
14.47%
Airline  14.63%
14.63%
14.63%
Reward 14.75% 14.75%
14.82%
Instant approval 15.49%
15.49%
15.49%
Bad credit 23.64%
23.64%
23.64%
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.
Source: CreditCards.com
Updated: Feb. 27, 2013

The national average annual percentage rate (APR) remained at 14.95 percent, after falling the previous week for the first time in nearly a month.

Wells Fargo prompted last week's dip in rates by lowering the APR on its student credit card.

The move -- which was the first by Wells Fargo in months (at least among the cards tracked by CreditCards.com) -- barely dented the national average, pushing it down by just a hundredth of a percentage point.

Most credit card issuers have refrained from making significant changes to their offer terms for much of the past year.

Instead, many are choosing to selectively adjust offers on just a small number of cards. As a result, the national average hasn't moved below 14.9 percent since February 2012.  

Credit card mail volume leaps
Most credit card issuers have also remained relatively conservative with their marketing efforts in recent months. For example, issuers dialed back the number of card offers they mailed to consumers in 2012 by nearly 40 percent compared to the previous year, according to research by Mintel Comperemedia.

Issuers' appetites for new customers may be increasing, however.

Issuers mailed 16 percent more offers in January 2013 than they did in December 2012, according to a research note released Feb. 25 by the financial services firm Credit Suisse, citing Mintel Comperemedia research. Compared to the same period in 2011, credit card mailings jumped an impressive 21 percent.

The double-digit leap in mail volume is significant, considering how flat credit card mail volume was for most of 2012.

After dropping precipitously in December 2011, mail volume fluctuated somewhat in early 2012, but remained exceptionally flat in the summer and fall. By the end of the year, Mintel Comperemedia research shows that credit card mail volume dropped by 38 percent in 2012 compared to 2011, according to a Jan. 22 research note by Credit Suisse.   

When mail offers dropped, experts partly attributed it to a shift in marketing strategy. For example, rather than rely as heavily on mailing credit card offers to consumers' mailboxes, which can get expensive, many issuers are experimenting with other ways to reach new customers.

In addition, the feeble economic recovery in the U.S. and the ongoing fiscal uncertainty created by ongoing legislative battles over government spending and taxation also played a significant role in dampening issuers' appetites, experts say.

Consumer spending, for example, was relatively weak throughout 2012, with credit card debt unexpectedly dropping by more than 5 percent in the final month of the year, according to consumer debt research by the Federal Reserve. The unemployment rate, meanwhile, declined in 2012, but barely, beginning the year at 8.3 percent and ending it at 7.8 percent, according to the Labor Department.

Currently, both consumers and businesses are facing significant uncertainty over the impact that federal spending cuts, which as of press time are still scheduled to take effect, will have on the economy.

However, credit card issuers, at least, appear to be feeling confident enough in the overall direction of the U.S. economy that they're willing to hunt for new customers more aggressively.

"We believe that 2013 will see moderately increasing competition for revolving balances," wrote Credit Suisse analysts Moshe Orenbuch and Meredith Roscoe in a research note about last month's jump in credit card mailings. Already, competition between credit card issuers is strong, they say, especially when it comes to reaching out to cardholders with deeper pockets. 

Consumer confidence is also up
Consumers, meanwhile, are also feeling somewhat better about the economy as well -- at least for now.

Significantly more consumers reported feeling optimistic about the U.S. economy in February after reporting increased pessimism the previous month, according to a new report from the Conference Board, released Feb. 26.

"Consumer Confidence rebounded in February as the shock effect caused by the fiscal cliff uncertainty and payroll tax cuts appears to have abated," said the Conference Board's Lynn Franco in a statement. "Consumers' assessment of current business and labor market conditions is more positive than last month. Looking ahead, consumers are cautiously optimistic."

See related: Credit card complaints reveal trouble hot spots

Published: February 27, 2013



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Credit Card Rate Report

Updated: 11-24-2014

National Average 14.98%
Low Interest 10.37%
Balance Transfer 12.73%
Business 12.85%
Student 13.14%
Reward 14.93%
Cash Back 14.94%
Airline 15.46%
Bad Credit 22.73%
Instant Approval 23.33%

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