Credit card interest rates rise to 15.03%
By Kelly Dilworth | Published: October 9, 2013
|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: Oct. 9, 2013|
Average rates on new card offers ticked up this week, according to the CreditCards.com Weekly Credit Card Rate Report.
The national average annual percentage rate (APR) rose to 15.03 percent Wednesday after Barclays increased the lowest available APR on its rewards card for U.S. football fans.
Applicants who qualify for the NFL ExtraPoints Visa from Barclays will be offered a range of APRs, starting at 14.99 percent and topping out at 22.99 percent. Previously, some applicants were offered a lower APR range of 13.74 percent to 22.74 percent.
In addition, Barclays eliminated the card's introductory APR and promotional balance transfer offers.
Two other issuers were also active this week. Discover shortened the length of time cardholders can take advantage of the Discover "it" card's promotions from 14 months to 12 months. Meanwhile, Credit One lowered the Visa Platinum card's annual fee from $99 per year to $75.
This marks the third consecutive week the average rate on new card offers has stayed above 15 percent. The average breached that mark in our Sept. 25 survey when it rose to 15.02 percent, where it held for two weeks before this latest change.
More borrowers fall behind on payments
Over the past few years, a record number of credit card holders have paid their bills on time -- causing credit card delinquency rates to fall to their lowest levels in decades.
New research from the American Bankers Association, however, suggests that downward slide may be coming to a halt -- at least for now. According to the association's latest Consumer Credit Bulletin, bank card delinquencies remained flat in the second quarter of 2013, after falling to a 22-year low the previous quarter. The total number of late payments rose from 2.41 percent of all credit card accounts to 2.42 percent.
A slightly larger number of borrowers also fell behind on other types of loan payments in the second quarter, including home equity loans, indirect auto loans and loans on mobile homes. As a result, the ABA's composite delinquency rate -- which measures late payments on eight types of closed-end loans -- rose to 1.76 percent of all accounts.
Experts say late payments on credit cards and other types of loans are currently so rare that it's not surprising that the total number of late payments is finally starting to tick up.
"A leveling off in delinquency rates was inevitable after a four-year downward trend that saw consumers reduce debt and dramatically improve their personal balance sheets," said ABA Chief Economist James Chessen in an Oct. 7 press release. "The good news is that delinquency rates remain near historical lows and are unlikely to spike in the near future."
That said, late payments are also unlikely to fall much lower any time soon, said Chessen. "Consumers may find it difficult to further improve their financial positions after years of working to pay down debt," he said. "Stagnant incomes and a weak job market aren't going to help change that trend."
Meanwhile, it could be a while before the economy substantially improves, say experts -- particularly now that the country is facing yet another federal budget crisis, a partial government shutdown and continuing uncertainty over a possible default on the government's debt.
Shutdown sinks consumer confidence
Research from Gallup shows that the partial government shutdown, which went into effect last week, has spooked consumers so much that consumer confidence levels suffered their sharpest weekly drop since the 2008 financial crisis.
"Americans' confidence in the economy has deteriorated more in the past week during the partial government shutdown than in any week since Lehman Brothers collapsed on Sept. 15, 2008, which triggered a global economic crisis," said Gallup's Alyssa Brown in an Oct. 8 news release.
Sixty-seven percent of consumers told researchers that they thought the economy was "getting worse" rather than better. Forty-three percent said the state of the economy is currently "poor."
Previous legislative battles, such as the 2011 fight over the debt ceiling, have also caused consumers to grow more pessimistic, say researchers. But those declines in consumer confidence were more modest than the drop seen this week.
"While the economy is, in many respects, stronger than it was during the 2011 debt ceiling crisis, the current budget debate and government shutdown clearly show that partisan brinksmanship and the uncertainty it causes on Wall Street can negatively affect consumer confidence," wrote Gallup's Brown. "Thus, Congress' inability to reach a compromise to end the government shutdown and raise the debt ceiling could negatively affect U.S. stock prices, America's credit rating and, ultimately, the nation's economic recovery."
- Cash advance survey 2017: Read fine print before seeking quick cash – A review of 100 credit card cash advance policies found cash advance transactions can quickly consume an available credit line with fees, high interest charges, among other undesirable terms ...
- Household debt passes pre-recession peak, NY Fed finds – U.S. household debt has surpassed its pre-recession peak for the first time, says new data from the New York Fed. Economists say milestone doesn't mean consumers are over-leveraged ...
- Poll: Credit card fraud alerts surge, false alarms still common – Consumers report a 15 percent increase in contacts from banks about credit, debit card fraud ...