Research and Statistics

Credit card interest rates fall to 15 percent


Jan. 29, 2014: Average rates on new card offers dropped this week for the first time in nearly six months.

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Avg. APRLast week 6 months ago
National average15.00%15.06%14.96%
Low interest10.46%10.46%10.37%
Balance transfer12.55%12.55%12.39%
Cash back14.62%14.62%14.85%
Instant approval28.00%28.00%28.00%
Bad credit22.73%23.48%23.64%
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: Jan. 29, 2014

Average rates on new card offers dropped this week for the first time in nearly six months.

The national average annual percentage rate (APR) fell to 15 percent Wednesday after remaining locked at 15.06 percent for 10 straight weeks. This is the first time since August 2013 that the national average has declined.

The subprime lender Credit One spurred this week’s rate change by introducing a lower minimum APR to its Credit One Visa Platinum card.

Online applicants who qualify for the Visa Platinum card are now offered a range of APRs, starting at 17.9 percent and topping out at 23.9 percent. Previously, Credit One advertised a flat rate of 23.9 percent.

Credit One also replaced its single $75 annual fee with a range of possible fees, starting at $35 for consumers with the best credit and ending at $99.

Card issuers approve more credit

More than five years after the 2008 financial crisis, lenders still aren’t making it easy for consumers to qualify for new cards with favorable terms. Average rates on new card offers have increased by more than 3 percentage points since 2008.

However, credit card issuers are approving more applications, according to research released in December 2013 by the consumer reporting company Experian. They are also being a lot more generous with the amount of credit they’re willing to extend.

According to Experian’s Market Report, issuers approved $73 billion in available credit in the third quarter of 2013 — 29 percent more than they approved during the same period in 2012.

As a result, credit card holders now have more credit available to spend than they have had since 2008, according to Experian. That’s a big change from previous years when issuers responded to the credit crisis, in part, by slashing credit limits and approving smaller loans.

Card issuers are also being significantly more generous toward consumers with damaged credit scores, according to the report. For example, issuers approved $18 billion in new credit for consumers with near prime credit scores (ranging from 601-660) — 50 percent more than they approved the year before.

Consumers with bad credit also received more credit offers, according to Experian. So, too, did consumers with pristine scores.

In a press release announcing the data, Experian’s Linda Haran said the substantial increase in the total amount of credit issuers are willing to make available underscores how much more confident lenders have become.

It also illustrates how much more willing consumers are to apply for additional credit. “The positive growth trend signals a return to more normalized borrowing behaviors on the part of consumers,” said Haran in the release.

Consumers also piled on slightly more credit card debt in the third quarter of 2013, according to Experian. However, consumers still aren’t borrowing nearly as much as they did before the recession.

“Even though overall debt levels for consumers increased 2.5 percent year over year to $10.8 trillion in Q3 2013, it is still well below 2008 levels, when consumer debt was nearly $12 trillion,” said Haran.

“In addition, delinquency rates for most lending products are at or near record lows,” she added, “indicating that consumers are borrowing more responsibly. In fact, delinquent bankcard charge-offs decreased 16 percent in Q3 2013 compared with last year.”

Consumer confidence jumps again

Despite remaining cautious about the total amount of credit they’re willing to take on, consumers are significantly more confident about the economy, according to research from The Conference Board. Its Jan. 28 Consumer Confidence Index finds consumer confidence rose in January for the second month in a row.

“Consumers’ assessment of the present situation continues to improve, with both business conditions and the job market rated more favorably,” said The Conference Board’s Lynn Franco in a news release.

A larger percentage of consumers spoke positively about current business conditions and said jobs were easier to get. Significantly more consumers also expected to earn more money in the months ahead.

Consumers are less sure the job market will continue to improve, however, and are pessimistic about the number of new jobs that employers will create in the months ahead.

Still, analysts are optimistic that consumers’ brightened outlook will help propel the economy forward in 2014. “All in all, confidence appears to be back on track and rising expectations suggest the economy may pick up some momentum in the months ahead,” said Franco in the release.

See related:CFPB: Credit card complaints declined in 2013

What’s up next?

In Research and Statistics

Credit card interest rates remain locked at 15.06 percent

Jan. 22, 2014: Average rates on new card offers remained unchanged this week, according to the Weekly Credit Card Rate Report.

Published: January 22, 2014

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Credit Card Rate Report Updated: August 14th, 2019
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