Rate survey: Credit card interest rates rise to 14.96 percent
|CreditCards.com's Weekly Rate Report
||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 19, 2013
Interest rates on new credit card offers rose this week for
the first time in more than a month, according to the CreditCards.com Weekly
Credit Card Rate Report.
The national average annual percentage rate (APR) climbed to
14.96 percent Wednesday after Chase boosted the APR on one of it's hotel
rewards credit cards.
Cardholders who qualify for the Marriott Rewards Visa card
from Chase will now be offered an APR of 15.24 percent. Previously, consumers
were offered a 14.24 percent APR, which is just slightly below the national
Chase spokesman Rob Tacey declined to comment specifically
on the change. However, he said cardholders are free to shop around for a
better fit. "Chase offers a number of cards with different rates and
benefits," wrote Tacey in an email. "Which is why we encourage
customers to choose the card that is best for them."
Late payments drop
Average rates have remained near 15 percent for nearly three
years. However, despite contending with higher APRs than they did in the past,
most consumers are managing their credit card payments just fine.
Late payments on credit cards, for example, fell again in
May for five out of six of the nation's biggest lenders, according to multiple
Chase, Bank of America, Capital One and Discover each reported
Monday to the Securities and Exchange Commission that fewer people paid their
credit card bills late last month.
American Express said it received about the same number of
late card payments in May as it did in April. However, despite the lack of
movement, the overall number of late payments that it received remained
exceptionally low by historical standards.
The average delinquency rate during periods when the economy
is considered "normal," for example, hovers between 3 percent and 5
percent of all card payments, according to a Wall Street Journal article,
published June 17.
Currently, all six of the nation's biggest lenders are
reporting delinquency rates -- which measure late payments by 30 days or more --
that are well below that historical norm.
The delinquency rate for American Express clocked
in at 1.1 percent in May, according to a table
published by Reuters.
The delinquency rate for Chase fell to 1.6
The delinquency rate for Bank of America dropped
to 2.6 percent.
The delinquency rate for Capital One slid to
The delinquency rate for Discover hit 1.58
The delinquency rate for Citi decreased to 1.98
Analysts say that the continual drop in the number of late
payments that issuers receive is a good sign that most cardholders are
remaining financially afloat, despite the soft economy, and are serious about
paying their bills on time.
less income on debt
Many consumers are also enjoying smaller loan payments these
days in proportion to their income, according to a report released June 17 by
the Federal Reserve. That could also be helping to keep them above water.
According to the Federal Reserve's Q1 Report
on Household Debt Service and Financial Obligations Ratios, consumers spent
a slightly larger percentage of their income on required loan payments in the
first quarter of 2013, compared to the last three months of 2012.
Despite the quarterly uptick, however consumers still spent
far less of their disposable income last quarter on required loan payments than
they had for most of the past three decades.
The ratio -- which measures the
percentage of income that consumers spend on required loan payments -- hit
10.32 in the fourth quarter of 2012 -- a 33-year low. In the first quarter of
2013, it ticked up to just 10.49 percent. The third-lowest ratio on record -- 10.51 -- was recorded in the fourth quarter of 1980 and matched in
the third quarter of 1983.
Experts say that the lower debt service ratios over the past
several quarters are primarily due to today's historically low interest rates,
which are pushing the total amount that consumers have to pay on their loans way
down. The Fed lowered the federal funds rate -- a key interest rate benchmark
that affects most consumer loans -- down to zero in 2008 and has yet to raise
it. As a result, most consumers are paying far less to borrow than they
See related: Fed signals rate hikes remain in distant future
Published: June 19, 2013