Rate survey: Average card APR remains unchanged at 15.19 percent
By Kelly Dilworth | Published: April 27, 2016
Average rates on new card offers remained near record highs this week, according to the CreditCards.com Weekly Credit Card Rate Report.
None of the cards tracked by CreditCards.com advertised new interest rates. As a result, the national average annual percentage rate (APR) remained at 15.19 percent.
Average rates on new card offers are currently at their highest point in more than four years. Since 2012, the average card APR has mostly hovered between 14.9 and 15.09 percent. This is the first year since CreditCards.com began tracking rates in mid-2007 that the national average has stayed above 15.10 for more than four weeks.
Average rates on new card offers rose above 15.10 the first week of January after the Federal Reserve increased its benchmark interest rate by 0.25 percent and numerous card issuers increased their rates by the same amount.
Card issuers step up offers
Card issuers are mailing more credit card offers, according to data released by financial services company Credit Suisse, but the offers aren’t as enticing.
According to Credit Suisse, card issuers mailed 32 percent more offers last month than the previous year. “We believe that competitiveness remains high and will continue to ramp up in 2016 as the major issuers seek to grow accounts,” wrote analysts Moshe Orenbuch and Serena Hong in an April 20 research note.
We expect to see the card issuers marketing aggressively through 2016.
|— Moshe Orenbuch and Serena Hong
Credit Suisse, in a research note
Hungry for a larger number of customers, issuers are showing an increased willingness to spend to win over potential cardholders. As a result, Credit Suisse increased the number of card offers it expects issuers to send this year from roughly 4 billion to 4.3 billion – up from a combined 3.9 billion offers in 2015. “We expect to see the card issuers marketing aggressively through 2016,” said Orenbuch and Hong in the research note.
Despite mailing a larger number of offers, issuers are offering consumers fewer incentives and are remaining conservative about how much free credit they’re willing to offer.
Fewer 0 percent offers
Among the 392 million credit card offers consumers received, just 67 percent offered a 0 percent APR on purchases – down from 78 percent in 2015.
Meanwhile, the percentage of card offers advertising a 0 percent balance transfer APR remained flat this year. Just 74 percent of card offers advertised a 0 percent APR on balance transfers.
Issuers did bump up the average length of interest-free balance transfer offers. The average balance transfer offer gives cardholders 14.1 months to transfer a balance interest-free – up from 13.9 months in 2015. But these offers are still relatively short compared to previous years when the average balance transfer length regularly peaked between 16 and 20 months.
The percentage of cards promoting a rewards program also fell last month, according to Credit Suisse, indicating that card issuers are reining in some of the offers they send.
Consumers continue to spend
Despite receiving fewer promotional offers, consumers are still ramping up their spending and charging larger balances to their cards. According to Credit Suisse, credit card balances grew by more than 6 percent between February 2015 and February 2016.
Meanwhile, credit limits grew by roughly 3.5 percent in the fourth quarter of 2015, while utilization rates – a measure of the total amount of available credit consumers are using – expanded to a total of 18.7 percent.
|CREDITCARDS.COM WEEKLY RATE REPORT: APRIL 27, 2016|
|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: April 27, 2016|
See related: Fed: February card balances bounce back