June 10, 2015: The national average APR for new credit card offers remained locked in place Wednesday for the fourth consecutive week, according to the CreditCards.com Weekly Credit Card Rate Report.
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Average card rates held steady at 14.99 percent.
Most issuers left card offers alone this week. However, Barclaycard recently cut off applications for the Visa Black card, but the move is only temporary, according to Barclaycard spokeswoman Nicole Dye-Anderson. “We’ve temporarily closed acquisition channels while we work to enhance the product,” said Dye-Anderson in an email. “We have a lot of great things coming up.”
To reflect the interim closing, CreditCards.com removed the Visa Black card from the CreditCards.com database and replaced it with the Citi Prestige card, which charges a slightly higher APR. The switch resulted in some category APR changes, but didn’t affect the national average.
Card usage bounces back
Consumers are relying more heavily on their credit cards, according to multiple reports, causing balances to soar to levels not seen since 2010.
According to the Federal Reserve’s latest consumer credit report, revolving debt — which is mostly made up of credit card debt — expanded to a more than five-year high in April after decreasing earlier in the year.
By the end of April, consumers owed their card companies more than $899 billion — up from nearly $891 billion in March.
Year-over-year, card balances have increased substantially as consumers become more comfortable padding their balances and paying them off more slowly. In April 2014, consumers owed approximately $870.8 billion on their cards — nearly $29 billion less than they owed this year.
According to the financial analysis company Trefis, part of the reason card balances are increasing is because people are doing more of their shopping online. “With the sharp growth in e-commerce sales giving people an additional incentive to switch from cash payments to the use of cards as well as Internet banking options, the size of outstanding card balances and card payment volumes have risen steadily over recent years,” said Trefis in a June 4 research note.
Data released by Trefis showed that consumers spent nearly $462 billion in the first quarter of 2015 on cards granted by the seven biggest issuers, including Chase, Bank of America, Citi, American Express, Capital One, Discover and U.S. Bank. In the first quarter of 2014, by contrast, cardholders spent approximately $433 billion.
According to Trefis, card spending has increased by approximately 6 to 7 percent every year since 2011. “We believe that this 6 to 7 percent annual increase in purchase volumes will continue over the coming years,” wrote Trefis in a research note. “But a faster-than-expected improvement in economic conditions could boost card usage at a faster rate.”
A separate report released June 8 by the Federal Reserve Bank of New York showed that consumers expect to spend more over the coming year, which could translate into fatter balances in the future. However, consumers’ spending plans are still relatively conservative compared to previous years when they were much less cautious with their spending.
Younger consumers and people with less money were somewhat more optimistic about how much they’d be able to spend, according to the survey. In contrast, consumers with more education and higher incomes were more conservative with their plans.
Meanwhile, consumers are fairly confident they’ll be able to repay what they owe, according to the survey, but they don’t expect lenders to make it any easier for them to borrow. Consumers typically felt that it was at least somewhat easier to get a loan now than it was a year ago, but most don’t expect credit standards to loosen significantly any time soon.
|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: June 10, 2015|
See related:Credit card delinquency statistics