Rate survey: Credit card interest rates don't budge
|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: July 10, 2013
Interest rates on new credit card offers stayed put this
week, according to the CreditCards.com Weekly Credit Card Rate Report.
The national average annual percentage rate (APR) remained
at 14.96 percent Wednesday for the third consecutive week.
None of the cards tracked by CreditCards.com featured offer
changes this week. That includes changes to promotional balance transfer offers
and introductory (teaser) APRs.
Despite occasional fluctuations over the past six months,
average APRs on new credit card offers have remained exceedingly stable
throughout 2013. For example, average credit card interest rates haven't changed
by more than a handful of basis points since the beginning of the year. A basis point is one-hundredth of 1 percent.
As a result, the national average has remained stuck between
14.93 percent and 14.98 percent since January 1. Average card rates for the
year are currently 14.95 percent -- which is just 1 basis point shy of the 2012
average of 14.96 percent.
Credit card holders have contended with relatively high average
interest rates on new card offers for some time. For example, the national
average has hovered between 14 percent and 15.22 for more than three years.
The higher rates have made it significantly more expensive
for new cardholders to carry a balance than in previous years, when average
rates were closer to 12 percent. Despite higher APRs on new card offers,
however, a record number of cardholders are still managing to pay their credit
card bills on time.
Late payments on credit cards, for example, recently fell to
the lowest level since 1990, according to research released Monday by the
American Bankers Association.
The reduction in late payments is good news for credit card
issuers, since it means today's cardholders are less risky to lend to and are
much less likely to overextend themselves.
Credit card delinquencies -- meaning late payments by 30
days or more -- have been falling steadily over the past several years, as
recession-scarred cardholders keep a tight rein on their finances and avoid
borrowing more than they can afford to repay.
Today, credit card late payments have fallen to a 22-year low, according to the American Bankers Association -- a positive sign that
consumers' determination to keep their credit histories clean remains strong.
The average percentage of late payments that issuers received
over the past 15 years, for example, is currently 3.87 percent of all accounts.
In the first quarter of 2013, by contrast, just 2.41 percent of all accounts
The sharp improvement in the number of people who are
repaying their bills on time shows that most American households are continuing
to regain their financial strength and are in a far better financial position
than they were just a few years ago, said ABA chief economist Keith Chessen in
a press release
announcing the ABA's latest Consumer Credit Delinquency Bulletin. Consumers are
not only paying their bills on time because they want to, says Chessen; they're
paying them on time because they can afford to.
"Sharply lower delinquency levels reflect
improving consumer balance sheets, steady job creation and a continuing
increase in household wealth," said Chessen in the release.
Today's ultra-low delinquency
rates are likely to remain at record levels for some time and may even drop
more in the near future, according to a survey of bank risk professionals released July 9
by the credit rating agency FICO. Three of four surveyed expect late payments on credit cards to either hold steady over
the next six months or drop even further.
Of those surveyed, 61 percent said they expect
average credit card balances to rise by 2014. Similar percentages told
researchers they expect demand for new credit of all types to increase
over the next six months, and that lenders
are more optimistic about
consumers' finances and are likely to increase the amount of credit they're
willing to hand out.
"These results say quite a bit about the psychology of borrowers
and lenders," said FICO's Andrew Jennings in a statement
accompanying the release. "After years of caution, lenders are now in growth
mode and feeling good about extending credit. But I find the borrower side of
the equation even more intriguing. It appears that borrowers are beginning to
shed the frugal habits that helped them deleverage to the tune of more than a
trillion dollars since 2008."
See related: Fed: Credit card balances spike in May, Average credit card debt? Take your pick
Published: July 10, 2013