Rate survey: Credit card interest rates stay constant
By Kate Tomasino | Published: October 26, 2011
|CreditCards.com's Weekly Rate Report|
|Avg. APR||Last week||6 months ago|
|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.)|
|Updated: Oct. 26, 2011|
Interest rates on new credit card offers remained unchanged this week, according to the CreditCards.com Weekly Credit Card Rate Report.
We found no changes in our database this week, leaving the average annual percentage rate (APR) just shy of its record high for a second straight week. The current record is 15 percent -- where it stood just two weeks ago.
Despite this week's pause, records have been broken at an unprecedented rate recently. The national APR average broke or equaled a record high for seven straight weeks from late August through mid-October until it declined two weeks ago.
Still, for the year, APRs are more stable than at any time since CreditCards.com began tracking rates in 2007. The difference between the average's 2011 high APR (15 percent) and low (14.65 percent) is just more than a third of a percentage point. Most other years, that difference is a full percentage point or more. In 2010, for example, the high-water mark was 14.78 percent and the low point was 12.87 percent -- nearly a 2 percentage point difference.
When rates have moved, they've trended upward -- rates have fallen only once since July. However, more often than not in 2011, rates have stayed static. This year, there have been 22 weeks during which the rate hasn't changed from the previous week. That's more than we saw in 2009 and 2010 combined (21 weeks).
In those years, banks and creditors were trying to reconcile the consequences of the Credit CARD Act of 2009. The overall national average APR rose from 12.15 percent in January 2009 to 14.78 percent in late 2010. Now that the regulations have been in effect for more than a year, lenders seem to have found their footing.
There's other good news. Charge-offs, or credit card account balances written off as uncollectible by creditors, are also down according to a Moody's Analytics survey, and delinquencies are flat. Credit card charge-offs improved significantly in September, according to the Moody's Credit Card Index.
The charge-off rate fell to 5.27 percent -- its lowest level since December 2007, the report says. The report went on to note that the 30-day delinquency rate index, often a predictor of future charge-off rates, stayed at an all-time low of 3.04 percent in September. In other words, the amount of consumers who are in a financial situation that allows them to pay their credit card balances is rising. However, some customers may not yet be feeling the positive impact of these numbers.
The Conference Board's Consumer Confidence Index from October 2011, published by IHS Global Insight, indicates that "consumer confidence nosedived in October" and "since the beginning of the summer, consumer confidence has fallen more than 35 percent."
It's not all bad news, though. The analysis went on to show that "there are many past examples when low levels of confidence did not translate into weaker spending." Also, some economists predict that once the economic crisis in Europe stabilizes and/or Congress provides a stimulus plan that includes deficit reduction, the economy will even out and credit card APRs will start to settle and possibly decrease.
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