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Tuesday, April 15th 2014

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Rate survey: Credit card interest rates rise to 14.98 percent

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CreditCards.com's Weekly Rate Report
  Avg. APR Last week 6 months ago
National average 14.98%
14.94%
14.96%
Low interest 10.37%
10.29% 10.40%
Balance transfer 12.48%
12.62%
12.62%
Business 12.98%
12.98%
13.13%
Student
13.16%
13.16%
13.31%
Cash back  14.95%
14.17%
14.30%
Airline  14.63%
14.63%
14.63%
Reward 14.82% 14.73%
14.80%
Instant approval 28.00%
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: May 22, 2013

Interest rates on new credit card offers shot up this week, according to the CreditCards.com Weekly Credit Card Rate Report.

The national average annual percentage rate (APR) rose to 14.98 percent Wednesday after Chase introduced an increase in the lowest available APR on the Chase Freedom card by 3 percentage points. 

The Chase Freedom card previously featured a range of possible APRs, starting at 13.99 percent and topping out at 22.99 percent. It now also features a card with just one flat rate of 16.99 percent.

The national average was also impacted this week by a reshuffling of the CreditCards.com database. Occasionally, CreditCards.com updates the database in order to more accurately reflect the current market.

This week, CreditCards.com updated the categories for several cards, causing the average APRs for those categories to change. We also replaced a discontinued card for sporting enthusiasts with a similar card that featured a slightly higher APR. 

Issuers revive marketing efforts
After months of inactivity, issuers have been busier than usual in recent weeks. For example, this is the third week out of six that the national average has changed due to an issuer making changes to a card offer.

Previously, card offers remained unchanged for months at a time, with issuers making few if any changes to credit card APRs or to short-term promotions.

In addition to tinkering with new card offers, issuers also appear to be ramping up their marketing efforts this year after cutting back significantly in 2012.

For example, issuers mailed nearly 30 percent more credit card offers to consumers in April compared to the same time last year, according to new data from Mintel Comperemedia, which tracks credit card mailings.

Experts predict that credit card mail volume will continue to remain strong throughout the year as issuers compete more heavily for new business. In a research note released Tuesday, analysts at the financial services firm Credit Suisse predicted that, by the end of this year, issuers will have sent 10 percent more card offers to consumers' mailboxes than they did in 2012.

"We believe 2013 will see increasing competition for revolving balances," wrote analysts Meredith Roscoe and Moshe Orenbuch in the report.

Consumers cut back on debt
Consumers, however, may not be interested. They opened significantly fewer credit card accounts in the last three months of 2012 than they did the previous year, according to new research from the consumer reporting agency TransUnion.

Consumers are still opening more accounts these days than they did in the first few years after the recession, according to TransUnion. However, their appetite remains weak. 

In addition to opening fewer accounts, cardholders are also carrying less debt from month to month and are leaving less debt on their cards than they used to. Average credit card balances fell by nearly 2 percent (1.7 percent total) in the first quarter of 2013, compared to the same time last year, according to TransUnion. The average credit card holder currently carries about $4,878 in credit card debt, down from $4,962 in the first quarter of 2012.

TransUnion's latest study of consumer credit reports also found that cardholders are continuing to repay their debts on time and aren't letting one-time surges in debt last for longer than a few months. For example, cardholders successfully paid down at least part of their holiday balances this year, trimming their average debt loads by around $244 between the fourth quarter of 2012 and the first quarter of 2013.

Late payments on credit cards also fell in the first quarter of 2012, as they usually do in the first three months of the year, according to TransUnion.

"We traditionally see credit card delinquencies and balances decline during the first three months of the year as many people pay down their holiday shopping balances or use their tax refunds to pay off their debts," said TransUnion's Ezra Becker in a statement accompanying the report.

The lower levels of card debt compared to 2012 shows that cardholders are remaining exceptionally conservative about how they handle credit. "In addition to the seasonal quarter-over-quarter drop, the year-over year improvement in credit card delinquencies is indicative of how consumers continue to value their credit card relationships," said Becker in the release.

See related: NY Fed: Credit card balances reach new low, Fed study: Recession really changed our spending habits

Published: May 22, 2013


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Credit Card Rate Report

Updated: 04-15-2014

National Average 15.02%
Low Interest 10.33%
Balance Transfer 12.66%
Business 12.98%
Student 13.27%
Cash Back 14.84%
Reward 14.99%
Airline 15.30%
Bad Credit 22.73%
Instant Approval 28.00%

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