Credit card interest rates remain at 15.07 percent

By's Weekly Rate Report
  Avg. APR Last week 6 months ago
National average 15.07%
Low interest 10.37%
10.37% 10.33%
Balance transfer 12.82%
Business 12.80%
Cash back 14.98%
Airline 15.46%
Reward 15.05% 15.05%
Instant approval 28.00%
Bad credit 22.73%
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. 8, 2014

Average rates on new card offers held steady this week, according to the Weekly Credit Card Rate Report.

The national average annual percentage rate (APR) remained at 15.07 percent Wednesday after increasing the previous week to its highest point in more than two years. 

Most issuers left credit card terms alone this week. USAA, however, eliminated a 12-month, 0 percent balance transfer offer on two of its rewards credit cards: the USAA American Express card and the USAA World MasterCard.

USAA introduced the interest-free balance transfer offers in early September and advertised them for about a month before taking them down. Currently, only one USAA credit card -- the USAA Military Affiliate card -- still features a 0 percent balance transfer teaser for online applicants. None of the cards advertised on USAA's website include a promotional APR on purchases.  

Issuers less generous with balance transfer offers
Issuers frequently use 0 percent balance transfer offers to lure new cardholders. But research conducted by shows that most card issuers are content with the balance transfer offers they are already offering.

Since Jan. 1, just 13 cards tracked by have advertised a new or revised promotional offer on balance transfers.

Balance transfer periods were cut by several months on four cards and just two extended the interest-free balance transfer period.

Meanwhile, two issuers tracked by introduced a new promotional balance transfer offer and then retracted it within a few months. Just one issuer introduced a new balance transfer offer and left it.

According to research conducted by Mintel Comperemedia, which tracks credit card mailings, issuers mailed slightly more 0 percent balance transfers offers in the first eight months of 2014 than they did the previous year. That indicates that issuers are competing more fiercely for new cardholders and are using interest-free balance transfers to entice them.

But issuers appear to be less generous this year than they were in 2013 and are sticking to shorter balance transfer periods. For example, between January 2014 and July 2014, the average number of months issuers allowed cardholders to take advantage of a 0 percent balance transfer offer was relatively depressed compared to the first half of 2013.

The average balance transfer period became slightly longer in August, compared to the previous year. In August 2014, the average balance transfer period lasted for 15.7 months. In August 2013, it lasted for an average of 15.6 months.

But month over month, the average balance transfer period fell significantly between July and August. In July 2014, for example, the average balance transfer promotion lasted for 19.5 months, approximately four months longer than in August. 

Cardholders shed debt
Credit card holders, meanwhile, are continuing to treat their cards like transactional tools, rather than loans, and are saving money on interest charges by paying off their credit cards at record rates. 

According to new research from the American Bankers Association, late payments on credit cards fell even further in the second quarter of 2014 after falling substantially between January and April.

The ongoing decline in the number of late payments has surprised analysts who expected credit card delinquencies -- late payments by 30 days or more -- to increase this year after falling to record lows in 2013.

According to multiple reports, lenders have been somewhat more generous toward cardholders with imperfect credit and analysts expected that the larger pool of applicants would inevitably lead to an increased number of late payments.

The Federal Reserve's latest survey of senior loan officers reports a slightly larger number of banks are easing standards for new credit card applications and approving applicants with lower scores. But despite approving a more diverse set of applicants, issuers are still collecting a record number of payments on time.

According to ABA Chief Economist James Chessen, that's partially due to the fact that cardholders' personal finances have improved substantially since the Great Recession. "Strong job growth, rising income, low interest rates and falling debt levels have led to consumers having a greater capacity to repay debt," said Chessen in a news release.  

Credit card holders are also limiting the amount of debt they're carrying on their cards, making it easier for them to pay their bills. According to the Federal Reserve's latest report on household debt and credit, credit card balances shrunk in August after increasing for five straight months.

"Consumers are thinking twice before increasing their level of debt, with many using credit cards as a payment vehicle rather than a tool to finance purchases," said Chessen in the release. "The economy's slow march forward has put consumers in a better financial position to meet their obligations, and banks will continue to extend credit to a growing number of qualified borrowers as the economy improves."

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Published: October 8, 2014

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