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Rate survey: Credit card interest rates rise for the second straight week

Summary

July 9, 2014: Interest rates on new card offers rose Wednesday for the second consecutive week, according to the CreditCards.com Weekly Credit Card Rate Report

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CreditCards.com’s Weekly Rate Report
Avg. APR Last week 6 months ago
National average15.03%15.02%15.06%
Low interest10.37%10.37%10.46%
Balance transfer12.64%12.64%12.55%
Business12.80%12.80%12.98%
Student13.27%13.27%13.27%
Cash back14.91%14.91%14.62%
Airline15.46%15.38%14.51%
Reward15.00%14.98%14.91%
Instant approval28.00%28.00%28.00%
Bad credit22.73%22.73%23.48%
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.
Source: CreditCards.com
Updated: July 9, 2014

Interest rates on new card offers rose Wednesday for the second consecutive week, according to the CreditCards.com Weekly Credit Card Rate Report.

The national average annual percentage rate (APR) inched up to 15.03 percent this week, after increasing to 15.02 percent the previous week.

Chase spurred this week’s rate change by hiking the APRs on two of its travel rewards cards. Chase boosted the APR on the United MileagePlus Explorer card from 15.24 percent to 15.99 percent.

It made the same change to the IHG Rewards Club Select credit card, which also charged cardholders a single APR of 15.24 percent. Applicants who apply for the hotel rewards card will now be charged a flat APR of 15.99 percent.

This is the fourth time in just over three months that Chase has adjusted APRs on cards tracked by CreditCards.com. Since April 9, Chase has increased the APRs on five of its travel rewards cards: The Disney Rewards Visa card, the Marriott Rewards Visa Signature card, the Southwest Airlines Rapid Rewards Plus card and now the United MileagePlus Explorer card and the IHG Rewards Club Select card.

Since Jan. 1, the national average has increased just five times. In one of those instances, the change in average rates was due to a reshuffling of the CreditCards.com database, rather than a rate change. Every other increase in the national average this year was caused by a small rate change by Chase.

Most credit card issuers are leaving APRs alone this year. The national average has fallen just twice since Jan. 1. It’s remained unchanged 20 weeks out of 27.

Unemployment nears 6-year low
Compared to the last five years since the end of the Great Recession, 2014 has been a relatively good year for credit card holders.

Incomes have slowly risen, while jobs have become significantly easier to get. Earlier this month, the Labor Department reported employers added 288,000 jobs to the economy in June and a revised 224,000 jobs in May.

The Labor Department also revised the number of jobs created in April to 304,000 jobs, which is the single largest increase in the number of newly available jobs since January 2012.

The unemployment rate, meanwhile, fell to 6.1 percent in June — its lowest point in nearly six years. The last time the unemployment rate hit 6.1 percent was in September 2008 when the worst of the financial crisis was unfolding.

According to the Labor Department, Americans in a wide variety of professions benefited from a substantial increase in new jobs — indicating that low-paying employers, such as retailers, aren’t the only employers adding new workers.

“Job gains were widespread,” said the Labor Department in the July 3 release. Professional and business services, the food service and retail sectors and the health care industry reported the strongest job gains, said the Labor Department. But other industries also reported substantial gains, including the manufacturing sector and the financial services and real estate industries.

Consumer spending slumps
Analysts say last month’s jobs report could indicate the economy is finally gaining traction after years of disappointing growth. However, a separate report, released July 7 by Gallup, showed that despite substantial improvements to the economy, consumers are still relatively conservative about their spending, which could hamper future growth.

For example, average daily spending on nonessential purchases fell last month for the first time since January, according to Gallup’s daily tracking survey.  The average daily amount consumers spent on nonessential goods, such as clothing and eating out, fell to $91 in June — down from an average of $98 in May.

May’s monthly average was the highest recorded since 2008, according to Gallup.  But June’s drop in spending could indicate that consumers still aren’t ready to spend the way they did before the Great Recession, even if the economy is significantly improved.

“That self-reported spending did not increase in June is important, given that consumer expenditures are an important driver of the U.S. economy,” said Gallup’s Rebecca Riffkin in a news release.  “While Americans are spending more than they did several years ago, spending has not returned to pre-recession levels. It may take more time before the recent encouraging improvements in the labor market and economic confidence lead to further increases in consumer spending.”

Additional economic indicators show consumers are willing to take on a lot more risk these days — including with high-interest credit card debt. For example, the Federal Reserve reported July 8 credit card balances rose by 2.5 percent in May after surging by 12.3 percent in April.

See related:Rate survey: Credit card interest rates rise to 15.02 percent

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Fed: Card balances extend growth

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Published: July 8, 2014

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Credit Card Rate Report Updated: August 14th, 2019
Business
15.55%
Airline
17.50%
Cash Back
17.63%
Reward
17.50%
Student
17.69%

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