Interest rates on new credit card offers fell Wednesday for the first time in nearly a month, according to the CreditCards.com Weekly Credit Card Rate Report.
|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: Feb. 20, 2013|
The national average annual percentage rate (APR) returned to 14.95 percent this week after remaining at 14.96 percent for two consecutive weeks.
This week’s dip in rates was minor. However, it’s significant in that it marks just the third time in 33 weeks that average rates have declined.
Wells Fargo spurred this week’s rate change by lowering the APR on the Wells Fargo Cash Back College Visa Card. Previously, the card featured an APR range of 12.15 percent to 21.99 percent. It now features a slightly lower range of 11.15 percent to 21.15 percent.
Wells Fargo spokeswoman Natalie Brown confirmed this week’s rate change and said that the issuer was simply adjusting to market conditions.
Cardholders continue to be frugal with credit
Wells Fargo’s Brown didn’t elaborate on any particular market condition prompting the bank to cut the rate on its student card. However, card issuers are facing increasingly favorable conditions as they head into the second quarter of 2013.
Credit card holders have been steadily paying down the debt they owe for the past several years and even paid a record number of bills on time in the third quarter of 2012, according to the American Bankers Association’s most recent Consumer Credit Delinquency Bulletin. Bank card delinquencies — meaning, the number of late payments that consumers make by 30 days or more — fell to their lowest levels since 1994, according to the bulletin, underscoring the fact that consumers are still extra cautious with their cards.
Late payments on credit cards did increase slightly in December, according to the consumer reporting company TransUnion’s quarterly trends data, released Feb. 20. However, experts say that card delinquencies were already so low by the summer of 2012 that it was inevitable that they would rise again at some point.
Average credit card balances per borrower also rose slightly in the fourth quarter of 2012, according to TransUnion, from $4,966 in the third quarter of 2012 to $5,122 in the fourth quarter.
Though balances ticked up over the past three months, they’re still lower than they were a year ago when they averaged $5,204, say TransUnion analysts.
The lower balances may mean that holiday shoppers were slightly more frugal this year with the amount of debt they put on their cards. Research from the Federal Reserve also showed that consumer credit card balances fell in the last month of the year.
December’s drop in debt was unexpected since consumers typically finance much of their holiday shopping with their cards.
“The fourth quarter traditionally results in higher credit card balances and delinquencies, much of it to do with the holiday shopping season,” said Ezra Becker, vice president of research and consulting at TransUnion in a statement. “Though serious delinquencies have risen seven basis points in the last year, average credit card debt has actually dropped, which is a sign that consumers continue to manage their credit well.”
Compared to previous years, however, “both credit card delinquencies and balances are below historic norms,” Becker also noted.
Experts say that the historically low number of late payments in recent months and the relatively modest credit card balances are signs that more consumers have learned to use credit responsibly — and are unlikely to make the same mistakes they did before the recession any time soon.
“Consumers continue to value their credit card relationships and are diligent about paying off their balances in a timely fashion,” said Becker in a statement. “This is a positive sign as more and more subprime borrowers have either entered or re-entered the credit card market.”