Survey: Average card rate sits tight at 15.01%
By Kelly Dilworth | Published: November 4, 2015
Interest rates on new credit card offers held firm Wednesday, according to the CreditCards.com Weekly Credit Card Rate Report.
Once again, none of the issuers monitored by CreditCards.com advertised new interest rates. As a result, the national average annual percentage rate (APR) remained at 15.01 percent for the fourth consecutive week.
Most issuers also left promotional terms, including introductory APRs and balance transfer offers, unchanged as well. Pentagon Federal Credit Union introduced a new balance transfer offer to the PenFed Platinum Cash Rewards Visa card. Cardholders who transfer a balance are now charged an introductory APR of 2.99 percent. Previously, cardholders were offered a 0 percent rate on balance transfers.
Platinum Cash Rewards Visa cardholders have a year to pay off their promotional balance transfer before the card's standard interest rate of 9.99 percent to 17.99 percent kicks in.
Consumers' appetite for credit continues to grow
Consumers are continuing to show renewed interest in applying for new cards, according to new research from the Federal Reserve, and banks are making it easier to get them.
The Federal Reserve surveyed senior loan officers at 69 U.S. banks and 23 U.S. branches of foreign banks and asked whether they'd seen an uptick in new applications for credit. According to the survey, nine banks reported that consumers' appetite for credit had become "moderately stronger" over the past three months. Only two said they'd seen slightly fewer applications.
Banks also reported making it somewhat easier for consumers to qualify for a new card or credit limit increase. Four banks said that they had increased credit limits for select cardholders. One said it had lowered the credit score required to qualify for a new card.
The Federal Reserve didn't ask these senior loan officers why their banks had become more welcoming in recent months, but banks have had a lot of incentive lately to be more generous toward new and current cardholders. As the economy improves, competition for new cardholders has intensified and many banks are finding that consumers with the highest credit scores already have a wallet full of cards and aren't as interested in applying for new ones.
Meanwhile, cardholders whose credit was damaged during the recession are continuing to make strong recoveries and proving to be significantly more responsible with their cards. That's prompting some financial institutions to compete more fiercely for consumers who are more worthy of credit than their credit scores indicate.
Charge-offs hit record lows
Approving new credit card loans has also become less risky in recent years. Credit card charge-offs for prime cardholders -- consumers with higher scores -- fell to an all-time low in October, according to research from the credit rating agency Fitch. As a result, banks have more breathing room to make new loans now that they're losing less money on bad ones.
Credit card charge-offs are unpaid card balances that card issuers have given up on trying to collect and are usually a good indication that cardholders' finances are either holding up fairly well -- causing fewer cardholders to stop making credit card payments altogether -- or are beginning to deteriorate. During the recession, charge-offs dramatically increased as more cardholders gave up on paying their bills.
According to Fitch, cardholders are also paying down their balances at a faster rate, indicating that they may have more money available to pay off more of their bills.
Delinquencies -- late payments by 30 days or more -- did inch up slightly in October, but they are still near record lows.
|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: Nov. 04, 2015|