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Capital One move pushes APRs higher for 3rd straight week

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Another week brought with it another interest rate move by Capital One, sending credit card APRs higher.

CreditCards.com's Weekly Rate Report
  Avg. APR Last week 6 months ago
National average 14.33%
14.31%
12.99%
Low interest 12.04%
12.04% 11.97%
Cash back  12.63%
12.63%
12.49%
Balance transfer 12.88%
12.88%
12.09%
Business 12.96%
12.96%
10.74%
Student 13.96%
13.96%
14.51%
Airline 14.46%
14.46%
13.60%
Reward
14.55%
14.51%
13.42%
Instant approval 15.99%
15.99%
13.32%
Bad credit 20.32%
20.32%
13.74%
Methodology: The national average credit card APR is comprised of 95 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: 6-16-2010

For a third straight week, Capital One's ongoing product adjustments boosted credit card interest rates, sending the national average annual percentage rate (APR) on new card offers to 14.33 percent. Among its most recent tweaks, the bank raised the APR on a rewards card. Two other banks also adjusted their card offers, although those changes had little to no impact on the rates database.

The rewards card category, however, experienced a rate increase after Capital One hiked its Venture One Rewards card's APR by 2 percentage points. It's the third straight week that Cap One has made moves. (Last week, two cards were impacted; the week before, three were.) While the bank didn't provide comment, Cap One has previously said its card adjustments have been a response to the "competitive landscape and market conditions."

Although the card marketplace remains challenging, with banks continuing to face tougher regulations and a weakened economy, Capital One is apparently seeing improved financial results. According to the company's recent filing with the Securities and Exchange Commission, more of its credit cardholders made on-time payments in May, as charge-offs and delinquency rates fell.    

Other banks get in on the act
Cap One wasn't the only bank making changes, with Chase and Navy Federal Credit Union also altering some of their card offers. Although Chase didn't provide comment, the credit union said its card pricing is always under scrutiny. "At Navy Federal, we are always evaluating our credit card pricing," says Justin Brooks, manager with Navy Federal's credit card portfolio. "Our goal is to offer competitive rates with low or no fees and great service. We feel even with this slight rate increase that we offer some of the very best rates and rewards in the industry."  

That industry has been charging borrowers more over recent months. As a result, a typical cardholder who borrowed $5,000 on a credit card today and consistently paid $150 per month at today's average interest rate would have to pay $6,414 to pay off the debt. That's $178 more than would have been required six months earlier. (Calculator: How long will it take to pay off your credit card balance?)

See related: Capital One's rate hikes send credit card interest rates higher, Cap One's moves push credit card interest rates higher, Credit card lending standards keep tightening, Fed report says, Credit card reform arrives in the form of the Credit CARD Act, Calculator: How long will it take to pay off your credit card balance?Credit card rates: interactive graphic on APR changes 

 

Published: June 16, 2010


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