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Credit card interest rates dip to 14.95%

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CreditCards.com's Weekly Rate Report
  Avg. APR Last week 6 months ago
National average 14.95%
14.96%
14.96%
Low interest 10.46%
10.37% 10.29%
Balance transfer 12.44%
12.39%
12.59%
Business 12.98%
12.98%
13.13%
Student
13.27%
13.16%
13.31%
Cash back  14.51%
14.85%
14.17%
Airline  14.63%
14.63%
14.63%
Reward 14.77% 14.79%
14.76%
Instant approval 28.00%
28.00%
15.49%
Bad credit 23.48%
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: Aug. 7, 2013

Average rates on new credit card offers fell to 14.95 percent Wednesday, according to the CreditCards.com Weekly Credit Card Rate Report.

Several card issuers altered rates this week, ending six weeks of inactivity.

Chase increased the APR on the Chase Slate card by 1 percentage point after testing two separate offers in July. Cardholders applying for the Slate card online now are offered a range of APRs, from 12.99 percent to 22.99 percent.  

Discover, meanwhile, widened the range of APRs on the Discover "it" card for students by increasing the maximum possible APR by 3 percentage points. Students may now be offered an APR as high as 21.99 percent.

The sporting goods store Cabela's also changed rates this week, lowering the maximum possible APR on the Cabela's Club Visa from 21.19 percent to 21.18 percent.

Capital One was also active. The issuer stopped promoting the Cash Rewards for Newcomers card. To reflect the change, CreditCards.com replaced the discontinued Capital One card in the CreditCards.com rates database with a lower-interest credit-building card.  

The surge in activity is notable, considering that the majority of card offers tracked by CreditCards.com haven't changed for most of 2013. The national average has remained static 23 weeks out of 32 this year.

Even when rates have moved, they haven't moved much. Average credit card interest rates are currently within 2 basis points of where they were a year ago, when the national average hit 14.97 percent.

Consumer spending still not taking off
Credit card issuers have remained exceptionally cautious throughout the economic recovery. Cardholders are paying their bills on time at record rates these days -- a positive sign for lenders that were burned during the recession by a high number of late loan payments.  However, they still aren't spending nearly as heavily as issuers would like.

New data from two separate reports on consumer spending suggests that consumers' appetite for spending has improved this year, but remains tepid.     

The Commerce Department's most recent tally of consumer spending shows 0.5 percent growth in June. That's the most it's grown since February. However, consumers also contended with significantly higher gas prices in June, as well as slightly higher food prices, putting a crimp in how much they could spend on other items, according to the report, released Aug. 2. Overall, consumers spent more on durable and nondurable goods, but slightly less on services.

A second survey, released Aug. 5 by Gallup, showed that self-reported spending on nonessential purchases -- which excludes household goods -- has remained flat throughout the summer. Every month, Gallup asks a sample of Americans how much they spent on nonhousehold items the day before. In July, consumers spent an average of $89 per day, according to Gallup -- down from $90 per day in both June and May.

Though the latest survey showed a slight drop, the longer-term trend in Gallup's poll is higher. In July 2012, for example, consumers said they spent about $73 per day -- $16 less than they spent last month. However, economists point out, the economy needs consumers to spend far more money on goods and services in order to recover at a faster rate. Consumer spending drives the vast majority of GDP growth in the U.S.

"The relatively flat spending levels of the past five months are consistent with the weak GDP reports of the past three quarters and the lack of improvement Gallup finds in its Payroll to Population employment rate over the past couple of years," wrote Gallup chief economist Dennis Jacoby in a news release announcing Gallup's latest findings.

"At this point, Gallup's economic data do not support the idea of a significantly improving U.S. economy in the second half of the year. In turn, this suggests retailers may be disappointed with the back-to-cchool spending season," wrote Jacoby.

Income growth slows
Part of the reason why consumers may be spending less these days is because their incomes don't support substantial spending and many recession-scarred consumers aren't willing to borrow more than they can afford to repay.

Consumers' incomes have grown somewhat in 2013. For example, income grew 0.4 percent in May -- prompting economists to hope that consumers would take that extra money to the mall.

However, the growth has been uneven. Personal income grew again in June. But this time, it grew by just 0.3 percent. The sluggish income growth, paired with higher food and gas prices, has made it hard for many Americans to eke more spending money out of their pay.

See related: Fed: Banks ease up on credit limits

Published: August 7, 2013


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