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Credit card interest rates hold steady at 15.06 percent

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CreditCards.com's Weekly Rate Report
  Avg. APR Last week 6 months ago
National average 15.06%
15.06%
14.95%
Low interest 10.46%
10.46% 10.37%
Balance transfer 12.55%
12.55%
12.39%
Business 12.98%
12.98%
12.98%
Student
13.27%
13.27%
13.16%
Cash back  14.62%
14.62%
14.85%
Airline  14.51%
14.51%
14.63%
Reward 14.91% 14.91%
14.78%
Instant approval 28.00%
28.00%
28.00%
Bad credit 23.48%
23.48%
23.64%
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.
Source: CreditCards.com
Updated: Dec. 4, 2013
Average rates on new credit card offers remained at 15.06 percent Wednesday, according to the CreditCards.com Weekly Credit Card Rate Report.

This is the third straight week that the national average has hit 15.06 percent -- a 2013 high -- and the 11th week this year that average rates have hovered just above 15 percent.

As a result of the higher rates, the average APR for the year rose this week to 14.98 percent. That's .02 percent above the previous annual high of 14.96 percent, set in 2012. Average rates on new credit card offers have risen every year since 2008.

This week, most card issuers left credit card APRs alone. Barclays introduced a higher maximum APR of 26.99 percent to the Apple Financing Visa. However, the change didn't affect the national average because the card's minimum APR of 22.99 percent is still available.

Card issuers offer more credit
Though credit card APRs have risen to near record highs over the past year, consumers aren't shying away from applying for more credit.

According to a Nov. 25 research report from the credit reporting agency Equifax, card issuers handed out more credit card loans in the first eight months of 2013 than they have since 2008.

From January to August 2013, issuers opened 27.6 million new card accounts -- up 7.3 percent from the same time last year.

As a result, significantly more people are carrying around bank-issued plastic these days. According to Equifax, the total number of open credit card loans reached an almost four-year high in October. Researchers counted 312 million open card accounts in October 2013. That's the largest number of existing bank-issued credit card loans that researchers have counted since December 2009.  

Consumers are also gradually increasing the total amount of credit they're willing to let sit on their balances, according to Equifax. But they're not letting those higher credit card balances keep them from paying their bills on time.

Late payments by 60 days or more fell substantially in October, compared to the year before, according to Equifax. Charge-offs -- missed payments that issuers say are uncollectible -- also declined.

Private sector employers ramp up hiring
Over the past year, issuers have enjoyed significant improvements in the overall credit card landscape. Cardholders are not only financially better off these days, compared to the first few years after the recession. They are also substantially more responsible with how they handle credit than before the financial crisis.   

That's made it significantly easier for issuers to approve larger amounts of credit in recent months, particularly since many cardholders have paid down the extra-large balances they accumulated before the recession.

Now, issuers have one more reason to be optimistic about approving more loans in the months ahead: Private sector employers are continuing to ramp up hiring and are filling significantly more positions than before. 

According to the payroll processing firm ADP, private sectors employers added a hefty 215,000 jobs to the economy in November. That's the largest number of hires employers have made since 2012, said ADP in a Dec. 4 report.

The substantial pickup in the number of jobs private sector employers added to the economy last month is notable considering that many economists predicted that the recent fiscal crisis in Washington would interfere with employers' willingness to hire.

"The job market remained surprisingly resilient to the government shutdown and brinkmanship over the treasury debt limit," said Mark Zandi, an economist at Moody's Analytics, in a press release. "Employers across all industries and company sizes looked through the political battle in Washington. If anything, job growth appears to be picking up."  

Consumer spending picks up
Consumers, meanwhile, are tentatively increasing the total amount they spend on nonessential purchases.

A new report from Gallup, for example, found consumers estimated they spent an average of $91 per day on discretionary purchases in November -- up from an estimated $88 per day the month before.

Consumer spending in November -- traditionally one of the strongest spending months of the year, according to Gallup -- has gradually increased every year since 2011. This year, however, November saw the biggest increase in year-over-year spending since the beginning of the financial crisis.

This substantial increase in spending could bode well for the rest of the holiday season, say analysts. "Spending in general in 2013 remains much stronger than it had been during the long slump from 2009 to late 2012 after the financial crisis," wrote Gallup's Jeffrey M. Jones in a Dec. 2 report. "If daily reported spending increases substantially, as is typical, from November to December, the coming month could be the strongest for spending that Gallup has measured since 2008."

See related: NY Fed: Household debt rise marks a 'turning point', Credit card balances extend their slide

Published: December 4, 2013


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