Rate survey: Credit card interest rates rise to 15.01 percent
|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: May 6, 2014|
Average rates on new credit card offers inched higher this week, according to the CreditCards.com Weekly Credit Card Rate Report.
The national average annual percentage rate (APR) rose to 15.01 percent Wednesday after remaining at 15 percent for three straight weeks.
Chase spurred this week's rate increase by boosting the APR on the Marriott Rewards Visa Signature card. Applicants who click on the hotel card's online application are now offered a single APR of 15.99 percent. Previously, some applicants were offered a slightly lower interest rate of 15.24 percent.
Barclays was also active this week. The issuer eliminated the 0 percent purchase APR on the U.S. Airways Premier World MasterCard. Previously, applicants had up to a year to make interest-free purchases. In addition, Barclays extended the airline card's interest-free balance transfer offer from 12 months to 15 months.
Demand for new credit
Credit card issuers are stepping up their efforts to attract new cardholders and are sending out substantially more offers than they did last year. For example, according to the financial services firm Credit Suisse, card issuers are expected to mail approximately 1 billion more offers in 2014 than they did in 2013.
According to new research from the credit reporting agency Equifax, many cardholders are taking the bait. Consumers opened 3.7 million new bankcard accounts in the first month of 2014 -- up 18.6 percent from the year before.
Equifax says that's the largest number of cards consumers have opened in a one-month period since the 2008 financial crisis.
Banks, in turn, are approving bigger credit limits and are gradually becoming less stingy with the amount of credit they're willing to lend. For example, the total amount of credit cardholders had available to borrow rose to nearly $2.5 trillion by March 2014 -- which is the most issuers have made available in nearly five years.
"Spring is here and consumers' desire for credit appears to be rising with the mercury," said Equifax chief economist Amy Crew Cutts in a press release. After years of shunning credit, consumers are applying for new or additional credit at a much higher rate. And "banks are more willing to offer it," she said.
As a result, the total amount of credit card debt that's still outstanding has also picked up this year. For example, by the end of March, cardholders owed more than $320 million, according to Equifax, which is the most cardholders have owed since September 2009.
Jobs picture improves significantly in April
Meanwhile, the economy is continuing to heal, which is good news for new applicants.
Credit card issuers are more willing these days to lend to applicants with imperfect credit, in part, because consumers' financial situations have substantially improved.
Jobs are somewhat more plentiful than they used to be, so consumers are less likely to be unemployed for longer periods. And incomes are inching up.
Now, research from the Labor Department shows that consumers' financial prospects have brightened significantly in just the last few months.
For example, employers added approximately 288,000 new jobs in April, according to a report released May 2 -- up from a revised increase of 203,000 in March. In February, employers added 222,000 new jobs, according to revised estimates.
That's a significant improvement from the first four months of 2013. Between January and April 2013, for example, employers added an average of just over 204,000 jobs per month.
Consumers also have significantly more money to spend nowadays. And according to data from the Commerce Department, they're spending it at much higher rates than they used to.
According to a report released May 1, consumer spending rose by nearly a full percentage point in March, which is the most it's grown in a single month in more than four years. During the same period, incomes rose by 0.5 percent -- up from a 0.4 percent increase in February.
See related: Rate survey: Credit card APRs linger at 15 percent
- Rate survey: Average card rate climbs to record high of 16.96 percent – July 18, 2018: The average credit card interest rate settled at a record high Wednesday after another major issuer increased rates in response to the Federal Reserve’s June 2018 rate change ...
- Rate survey: Average card rate jumps to 16.93 percent – July 11, 2018: The average credit card interest rate inched higher this week after several cards adjusted APRs ...
- Rate survey: Average card rate climbs to all-time high of 16.92 percent – July 5, 2018: The average credit card interest rate set another record this week, climbing to 16.92 percent ...