Credit card interest rates fall to 14.98 percent
By Kelly Dilworth | Published: November 19, 2014
|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. 19, 2014|
Average rates on new card offers fell below 15 percent Wednesday for the first time in more than a year, according to the CreditCards.com Weekly Credit Card Rate Report.
The national average annual percentage rate (APR) slid to 14.98 percent after Wells Fargo slashed APRs on two rewards cards.
Wells Fargo reduced the lowest available APR on its cash-back card from 13.15 percent to 12.15 percent. It also lowered the minimum APR on the Wells Fargo Rewards card by 2 percentage points, from 14.15 percent to 12.15 percent. In addition, it lengthened the cards' 0 percent APR promotional periods to 15 months.
Citi also revised interest rates this week, but its changes were less favorable. It replaced the Citi Hilton HHonors Visa Signature card's single APR of 14.24 with a range, starting at 15.24 percent and topping out at 19.24 percent.
Barclays was also active this week. It eliminated the 12-month interest-free purchase offer on the Visa Black card and extended the card's 0 percent balance transfer offer from 12 months to 15 months.
Credit card spending accelerates
Credit card spending picked up again last month after slowing down two months in a row, according to new research from First Data Corp.
Over the summer, spending was more robust as cardholders used their cards to pay for summer vacations. In July, for example, card spending increased by 6.2 percent compared to the previous year. In August, it increased by 5.8 percent.
Consumers typically prefer to charge hotel and travel purchases to their cards so issuers often see increased spending during the summer vacation months. But October's increase in card spending was also partially driven by heavier hotel spending, according to First Data.
Consumers also spent more overall on "late season" amusement park visits, thanks to seasonal Halloween events. In addition, consumers dined out more often in October and spent more money on Halloween parties and early holiday shopping.
"We're off and running with a strong start to the holiday shopping season as this year, consumers are showing confidence in their early spending," said First Data's Krish Mantripragada in a news release. "This confidence, which is buoyed by a lower unemployment rate, made October 2014 a robust spending month."
Credit scores on the rise
Despite charging more, on average, to their cards, most cardholders are still managing to pay their bills on time. Late payments have fallen to record lows this year and, according to new research from the credit bureau Experian, consumers' improved behavior is being reflected in their credit scores.
According to Experian's fifth annual State of Credit Report, released Nov. 18, the average VantageScore has risen from 664 to 666, on a scale of 300 to 850. In some areas of the country, average scores are even higher. For example, in three Minnesota cities (Mankato, Rochester and Minneapolis) average scores surpassed 700 this year, according to Experian.
Meanwhile, lenders across the country are approving more cards and making it easier for consumers with lower scores to qualify for new plastic.
According to Experian, banks approved 21.1 percent more bank cards this year, compared to 2013. As a result, the average cardholder is now carrying two or more credit cards in their wallet (2.18 cards on average).
People are also opening slightly more retail cards, according to Experian. Retail card lenders approved 3.5 percent more cards this year.
"This has been a notable year for borrowing," said Experian's Michele Raneri in a news release, "with more new credit being extended and consumers feeling more comfortable and confident about accepting those credit offers."
See related: Fed: Banks ease grip on cards
- Rate survey: Average card APR climbs to record high of 16.11 percent – July 26, 2017: The national average APR for new credit cards smashed another record this week, according to the CreditCards.com Weekly Credit Card Rate Report ...
- Survey: Average card APR holds steady at 16.06 percent for third week – July 19, 2017: The national average APR for new credit cards held still this week despite multiple changes to card offers, according to the CreditCards.com Weekly Credit Card Rate Report ...
- Rate survey: Average card APR remains at record 16.06 percent for second week – July 12, 2017: The national average APR for new card offers remained above 16 percent Wednesday for the second week in a row, according to the CreditCards.com Weekly Credit Card Rate Report ...