Rate survey: Credit card rates hit lowest levels in 5 months

CreditCards.com's Weekly Rate Report
  Avg. APR Last week 6 months ago
National average 14.91% 14.95%
Low interest 10.40%
10.40% 10.73%
Balance transfer 12.60%
Business 13.13%
Cash back  14.45%
Airline  14.54%
Reward 14.73%
Instant approval 15.49%
Bad credit 23.41%
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: Feb. 1, 2012

It's only February, but so far, 2012 looks like a promising year for rate-hike-weary credit card holders.

The average annual percentage rate (APR) for a new credit card offer fell to 14.91 percent -- its lowest level since August 2011 -- after Pentagon Federal Credit Union lowered the APR on one of its rewards cards.

The national average APR has fallen from 15.14 percent to 14.91 percent since the beginning of the year, continuing a trend that started in late 2011. In all, rates have fallen four times in less than two months since peaking at an all-time high of 15.22 percent in mid-December.

Meanwhile, rates haven't increased in seven weeks, equaling the longest such stretch we've seen since CreditCards.com began tracking rates in 2007. 

These lower rates mean real money to consumers. 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 $45 more to pay off the balance than would have just two months ago, when rates were at their all-time peak.

Pentagon Federal Credit Union (also known as PenFed) prompted the decrease by lowering the APR on its Visa Platinum Cash Rewards card from 13.99 percent to 9.99 percent. 

That's not the only change coming to that card, however. Beginning in February, PenFed is scaling back its cash-back rewards on the card. The card will still offer 5 percent back on gas purchases. However, non-gas purchases made with the card will bring just 0.25 percent cash back, instead of the previous 1 percent back.

In an email announcing the change to cardholders, PenFed offers Visa Platinum Cash Rewards card holders the opportunity to switch to a "new way to earn more rewards." They can switch to the PenFed Platinum Rewards card, which comes with the same 9.99 percent APR and no annual fee. The big difference is that the Platinum Rewards card offers points -- 5 points on gas, 3 on groceries and 1 on everything else -- rather than cash back.

See related: Calculator: How long will it take to pay off your credit card balance?

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Updated: 03-19-2019