Credit card interest rates rise to 15.05 percent
By Kelly Dilworth | Published: November 6, 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: Nov. 6, 2013|
Interest rates on new credit card offers rose to 15.05 percent this week, according to the CreditCards.com Weekly Credit Card Rate Report.
Barclays spurred this week's rate change by increasing the APR on the Wyndham Rewards Visa Signature card. Applicants who access the card online are now offered an APR range of 15.24 percent to 19.99 percent. Previously, some applicants were offered an APR as low as 13.24 percent.The sporting goods store Cabela's also adjusted card APRs this week. Cabela's lowered the minimum available APR for nonstore purchases from 15.17 percent to 15.16 percent.
American Express and Chase were active this week as well. Chase reinstated the 15-month, 0 percent APR offer on the Chase Freedom card after briefly eliminating it. American Express modified the introductory offer period for the Blue for Business card. Its cardholders now have nine months to make interest-free purchases.
Credit card issuers have had a hard time this year encouraging new and current cardholders to spend.
Average bank card balances, for example, hardly budged in the third quarter of 2013, compared to the same time last year, according to new research from the credit agency Equifax.
In 13 of the 25 largest metropolitan areas in the U.S., card debt rose by less than 1 percent in the past year. It six metro areas, card debt declined.
Metro regions that saw significant drops in card debt include Detroit, Chicago and Phoenix.
Experts often point to declining credit card debt as a sign that cardholders are worried about their finances and, as a result, cut back on spending or repay their balances in full.
Some metro areas, particularly those with significantly improved local economies, fared better, according to Equifax. For example, credit card debt rose by nearly 2 percent in the Washington-Baltimore metro region and by nearly 3 percent in Houston and its surrounding cities.
Residents in the Miami-Fort Lauderdale metro region, in Dallas-Fort Worth and in San Diego also increased their average debt loads by more than 1 percent, according to Equifax.
Analysts often pay close attention to regions that are increasing their average debt loads, since it could mean that residents in those areas are feeling more economically confident -- and thus willing to take the chance on higher credit card balances.
Still, a large number of U.S. cardholders are still cautious about how much debt they're willing to carry and are limiting the amounts they charge.
Retail cards see pop in usage
Retailer credit cards, however, are seeing a bigger uptick in debt than mainstream card issuers.
According to data released Nov. 5 by Equifax, card balances on cards issued by retail store brands grew by more than 7 percent in the third quarter of 2013, compared to the same time last year. Card balances nationwide grew by just 0.37 percent last quarter.
General-purpose bank cards in metro areas such as Phoenix and Detroit saw significant declines in balances, but balances on store cards in those regions grew. For example, in the Phoenix-Mesa metro region, retail card balances swelled by 7.67 percent in the third quarter. In the Detroit-Ann Arbor-Flint metro area, debt on store cards grew by 6.28 percent.
Analysts say that part of the reason why retail card balances have grown at a faster pace than bank cards may be because frugal consumers are taking advantage of store card deals that often lower the cost of a purchase.
"Consumers may be opting for retail credit cards because of the promotions, discounts and other perks they get at the register," said Equifax's Trey Loughran in a press release.
"Other consumers are likely compartmentalizing their purchases," he added, by "opening retail accounts to pay for larger purchases over time and using their bank cards for everyday purchases like gas and groceries to be paid in full each month."
Consumers with lower credit scores -- many of whom live in economically depressed regions -- also have an easier time gaining access to store credit, says Loughran, and that, too, may partially account for the steeper rise in debt.
"Retail card issuers are continuing to extend credit to near-prime borrowers, making store credit a viable option for consumers with lower scores who may have difficulty opening a bank card," said Loughran in the release.
Some traditional bank card issuers are slowly loosening their credit standards for select applicants, according to research released Nov. 4 by the Federal Reserve. However, it's still not easy for consumers with blemished credit to qualify for a new card with favorable terms.
See related: Fed keeps its foot on the gas
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