Chase move sends credit card interest rates higher
|CreditCards.com's Weekly Rate Report
||6 months ago
|Methodology: The national average credit card APR is comprised of about 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.)
Interest rates on new credit card offers, already in near-record heights, continued their
slow, steady climb this week, according to the
CreditCards.com Weekly Rate Report.
Spurred by a rate increase from Chase, the average annual
percentage rate (APR) on new credit card offers rose to 14.73 percent on
Wednesday. It's the eighth consecutive week that interest rates rose or stayed
flat -- the third longest run since CreditCards.com began tracking rates in
Chase, Citi adjust
Chase raised the bottom end of the APR range on the Slate
card from 11.24 percent to 11.99 percent, prompting the national average to rise.
The bank also lowered the card's top end from 22.24 percent to 21.99 percent. Because CreditCards.com uses only a card's lowest rate in its
calculations, the Slate card's reduced APR at its high end -- offered to consumers with less-than-stellar
credit -- didn't affect the national average.
In response to a request for comment on this week's card
changes, Chase spokeswoman Gail Hurdis says, "Our pricing reflects a multitude
of factors that are relevant to our business, and we adjust it from time to time
as we think it's appropriate for consumers and the company."
Other banks made significant moves this week as well. Citi raised
the top end of the APR ranges of the mtvU Platinum Select card and the Citi
Forward card by a full percentage point each. Both cards now feature a range of
12.99 percent to 20.99 percent, up from 12.99 percent to 19.99 percent the previous
week. Citi also extended from seven months to 12 months the period during which new
cardholders can take advantage of the Citi Forward card's 0 percent APR on new
purchases. Meanwhile, Discover increased the promotional 0 percent balance transfer period on its Discover Open Road card from 12 months to 18 months.
Credit loosened in the last quarter of 2010, but is still tight
This week's mixed findings on card offers were preceded by a
new survey from the Federal Reserve that showed that credit cards are becoming
easier to get, but they are not always consumer friendly.
On Jan. 31, the Fed released the quarterly Senior Loan Officer Opinion Survey, which said that a significant number of banks loosened credit in the fourth quarter of 2010, underscoring a trend that began earlier in the
year. According to the survey, 12.5 percent of banks said that they made it
easier for new cardholders to obtain credit in the last quarter of 2010, the
same number reported in the third quarter of 2010. It's worth noting, however,
that although five of the country's larger banks said that they relaxed credit standards
on new card applications, none of the smaller banks had.
Meanwhile, a significant number of large banks reported that
they tinkered with the terms and conditions on their card offers in the past
three months, though the changes weren't always favorable to consumers. About 11
percent of banks reported that they loosened the terms and conditions on their card
offers. An equal number said that they tightened them.
This finding is consistent with CreditCards.com data, which shows
that many of the country's largest banks are making some parts of their credit
card offers more attractive -- for example, by lengthening introductory periods
on promotional APRs -- while a significant number are also making other parts of
their card offers less attractive -- for example, by hiking interest rates and fees.
See related: Banks continue to ease lending standards, Fed survey shows
Published: February 2, 2011