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Credit card interest rates unchanged as 2010 draws to a close

Year filled with interest rate increases ends quietly

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Credit card interest rates remained unchanged this week, as banks wrapped up a turbulent year in which interest rates reached record highs.

CreditCards.com's Weekly Rate Report
  Avg. APR Last week 6 months ago
National average 14.68%
14.68%
14.43%
Low interest 11.91%
11.91% 12.04%
Cash back  12.48%
12.48%
12.63%
Balance transfer 12.82%
12.82%
12.93%
Business 12.91%
12.91%
12.96%
Student
13.31%
13.31%
13.96%
Airline 14.24%
14.24%
14.46%
Reward  14.34%
14.34%
14.74%
Instant approval 15.99%
15.99%
15.99%
Bad credit 24.95%
24.95%
20.32%
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: 12-29-2010

The national average annual percentage rate (APR) on new credit card offers remained at 14.68 percent this week following the Christmas holiday, according to CreditCards.com's Weekly Rate Report.

Our weekly examination of terms and conditions for 100 of the most popular cards in the nation showed no APR changes this week, making it the third week in the past five in which banks left rates unchanged. 

A costly year
Interest rates have been fitfully moving up since January, making this a costly year for credit card holders. As banks adjusted interest rates throughout 2010, amid anemic job growth and new regulations from the Credit CARD Act of 2009, cardholders saw interest rates rise nearly 2 percentage points over the course of the year. On Jan. 1, 2010, the average rate for new card offers was 12.97 percent -- the lowest APR recorded in 2010. Throughout the rest of the year, CreditCards.com saw a flurry of activity as banks experimented with new rates:

  • On Nov. 8, 2010, the national average hit 14.78 percent, the highest APR that CreditCards.com has seen since we began tracking APR rates in 2007.
  • On Feb. 3, 2010, the national average rose from 13.17 percent to 14.12 percent, setting off a record-setting trend in which interest rates remained stubbornly high. The national average APR for new credit card offers hasn't dropped below 14 percent since.
  • Over the course of the year, the national average rose 23 weeks, declined 18 weeks and remained unchanged 11 weeks.

As a result of all this activity, the average cardholder paid more in interest in 2010 than at any time since CreditCards.com began tracking rates in 2007. For example, a typical cardholder who borrowed $5,000 on a credit card today and paid $150 monthly at today's average APR would have to spend $229 more to pay off the balance than would have been required when 2010 began. (Calculator: How long will it take to pay off your credit card balance?)

Data: Most cardholders are keeping up
In spite of the changes, most cardholders appear to have kept up with this year's ballooning interest rates. In a report released last week, Moody's Investors Service announced that the national delinquency rate for credit card accounts that are at least 30 days late dropped for the 13th consecutive month in November and the charge-off rate for accounts that issuers deemed uncollectable also dropped in November for the fourth month in a row. Analysts at Moody's said they expect that cardholders' ability to pay at least the minimum amount on their credit card bills will continue to improve in 2011 -- that's good news for struggling cardholders who can't afford a lower credit rating.

This doesn't mean, however, that the average cardholders are finding it easier to pay off their balances. Moody's also reported that the number of cardholders who paid off large chunks of their credit card balances stayed relatively static last month, continuing an uneven year in which the payment rate improved substantially for most of 2010 and then leveled off in the fall.

Paying more than the minimum amount due is an important tool for consumers who are combating rising interest rates. However, this cardinal rule of money management is even more important in today's credit card climate when interest rates are at record highs. Using the earlier example of someone with $5,000 in credit card debt, the cost of paying just the minimum rather than a larger regular payment -- say $150 per month -- would be several thousand dollars and several more years in debt.

The overall forecast for 2011 remains cloudy
As consumers head into 2011, traditional bellwethers used to forecast economic growth are giving mixed signals about the months ahead. In its annual holiday wrap-up report, SpendingPulse announced that holiday spending grew 5.5 percent this year, higher than many analysts expected.

However, as retailers cheer and tally up their profits, consumers remain glum. The Conference Board reported on Dec. 28, that, in spite of the encouraging sales figures, consumer confidence slipped in December as more Americans remain pessimistic about the country's weak job market.

According to Lynn Franco, Director of the Conference Board's Consumer Research Center, consumer confidence is about the same as it was last year when the jobs forecast appeared equally gloomy. "Consumers' assessment of the current state of the economy and labor market remains tepid, and their outlook remains cautious," said Franco in the report. "Thus, all signs continue to suggest that the economic expansion will continue well into 2011, but that the pace of growth will remain moderate."

See related: 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: December 29, 2010


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