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Interest rates fall after Walmart card makes online return

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Interest rates on new credit card offers fell this week, according to the CreditCards.com Weekly Credit Card Rate Report, following the online return of Walmart's Discover card.

CreditCards.com's Weekly Rate Report
  Avg. APR Last week 6 months ago
National average 14.37%
14.44%
14.12%
Low interest 12.31%
12.31% 12.17%
Cash back  12.63%
12.63%
12.56%
Business 12.96%
12.96%
11.31%
Balance transfer 12.97%
12.97%
12.62%
Student 13.96%
13.96%
14.47%
Airline 14.30%
14.30%
14.17%
Reward
14.57%
14.70%
13.77%
Instant approval 15.99%
15.99%
18.41%
Bad credit 20.32%
20.32%
24.86%
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: 8-4-2010

The national average annual percentage rate (APR) for new card offers declined to 14.37 percent. While the larger trend has seen banks raising rates over recent months, APRs dropped after the Walmart Discover card offer came back online, due to the way CreditCards.com calculates the average APR. 

G.E. Money, which issues the retail giant's Discover card, reintroduced that card's online application after removing it from the Internet in late June. After its reappearance, we added the card to our database, replacing Walmart's closed-loop card, which has a 22.9 percent APR and, unlike the Discover card, can only be used at Walmart and affiliated stores. Since our rate calculations consider the low end of any APR ranges, the Walmart Discover card's rate of 13.9 to 22.9 percent brought down the national average.

So what prompted the Walmart Discover card's return? "The card offer never went away -- it was still available in stores while we made some changes to the online application process," G.E. Money spokeswoman Dori Abel says in an e-mail. "We had always planned to restore the online application once the update was completed, so nothing prompted the return online except the work being completed." Abel said the updated Walmart Discover card offer is unchanged from the prior offer.

This week's other card change, meanwhile, had no impact on the national average. Cabela's Club Visa had its APR adjusted to 9.99 to 18.30 percent from 9.99 to 18.34 percent following a change in the London Interbank Offered Rate or Libor, the benchmark interest rate to which that card's APR is pegged. (Libor is the British equivalent of the U.S. prime rate, to which most variable-rate cards in the U.S. are pegged.)

Despite this week's decline, rates have remained at elevated levels for much of this year. 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 $6,420 to pay off the debt. That's $186 more than would have been required on Jan. 1, 2010. (Calculator: How long will it take to pay off your credit card balance?)

Banks have kept lending standards tight -- including limiting borrowers' access to credit and charging high interest rates -- in an effort to guard against losses. But there are signs of improvement. "Like financial conditions generally, the state of the U.S. banking system has also improved significantly since the worst of the crisis," said Federal Reserve Chairman Ben Bernanke in a speech earlier this week. Bernanke noted that the rate of loan losses appears to be declining. "However, many banks continue to have a large volume of troubled loans, and bank lending standards remain tight," he said.

See related: Interest rates advance for fifth consecutive week, 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: August 4, 2010


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