Average card rates remain at 14.99 percent for fifth week
By Kelly Dilworth | Published: June 17, 2015
Interest rates on new credit card offers remained cemented in place Wednesday, according to the CreditCards.com Weekly Credit Card Rate Report.
The national average annual percentage rate remained at 14.99 percent for the fifth consecutive week.
None of the cards tracked by CreditCards.com advertised new interest rates. Promotional terms also remained unchanged.
Issuers have been reluctant to alter credit card terms for most of 2015. Average rates have drifted somewhat lower over the past year thanks to lower rates on a select group of cards. As a result, the average APR for the year is lower now than it's been in years. The average APR for all of 2015, for example, is currently 14.91 percent -- down from 15.01 percent in the first six months of 2014. However, issuers show few signs of changing rates on a wider group of cards.
Credit limits expand -- for some
Despite leaving interest rates mostly unchanged for much of the past year, issuers are making cards more appealing for at least some consumers by offering significantly bigger credit limits.
According to the American Bankers Association's latest Credit Card Market Monitor, the average card limit for new cardholders with the very best credit scores (known in industry-speak as "super prime" consumers) rose to $8,867 in the fourth quarter of 2014 -- up 2.7 percent from the previous quarter. Meanwhile, average card limits for new cardholders with good credit increased to $4,922 -- up 1.7 percent from the third quarter.
According to the ABA's Molly Wilkinson, issuers are becoming more generous with credit limits, in part, because consumers have more spending power. Wages are slowly increasing, according to research from the Commerce Department, and employers are creating significantly more jobs.
"Recent credit line increases for prime and super-prime cardholders show that lenders have become more confident in these borrowers' ability to meet their financial obligations in an improving economy," said Wilkinson in a June 11 news release.
Consumers are also more responsible with their credit card payments, making it less risky for issuers to lend larger sums of money. According to a separate report released June 16 by the credit rating agencies Experian and Standard & Poor's, late payments on bank-issued cards fell to 2.98 percent of all accounts last month after inching up three consecutive months.
Late payments on other types of loans, such as auto loans and mortgages, also fell to historic lows, underscoring just how much more responsible consumers have become in recent years.
"Consumer credit default rates are below pre-crisis levels, at new lows and continue to drift down," said the S&P's David M. Blitzer. "These low levels should not come as a surprise," he added. Interest rates are still relatively low thanks to a rock bottom federal funds rate. Households are limiting the total amount of debt they take on, making it more likely they'll be able to repay what they borrow, and consumer wealth is rebounding, said Blitzer. Consumers are also increasing their spending, he said. "In May, light vehicle sales were the highest since July 2005 and retail sales jumped. The economy looks good, consumers are spending and credit usage is rising."
That said, lenders are still cautious about how much credit they're willing to grant to consumers with lower credit scores. According to the ABA, the average credit limit for new cardholders with bad credit fell 0.4 percent in the fourth quarter to $2,352.
Despite their tighter grip on credit limits, issuers are granting more cards to consumers with low scores, according to the Wilkinson. "While average credit lines for subprime borrowers remain constrained due to both regulatory and economic factors, these customers continue to make up a growing share of new accounts," said Wilkinson in the release.
|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: June 17, 2015|
See related: Fed gives cardholders reprieve on higher rates