Rate survey: Average card APR doesn’t budge
The average APR on new card offers remained locked in place this week, according to the CreditCards.com Weekly Credit Card Rate Report.
None of the cards tracked by CreditCards.com advertised new interest rates. As a result, the national average APR remained fixed at 15.18 percent.
Average rates on new card offers are currently near record highs. Since Jan. 1, the average APR has remained solidly above 15.12 percent, making this the longest period of time on record that average rates have stayed above 15.10 percent. The last time the national average stayed this high for more than a week was in 2011 when average rates briefly peaked at 15.22 percent before dropping below 15 percent the following month.
The average APR for 2016 is currently 15.17 percent. During the same period in 2015, by contrast, the average APR for the year was just 14.93 percent.
Study: Credit makes people feel more disconnected from
As the economy improves, consumer appetite for credit is expanding. According to research from the New York Federal Reserve, credit card applications are up, while rejections are down. People are also charging higher balances to their cards.
That could affect how consumers feel about the purchases they’re making and may eventually lead to overspending, especially if cardholders use credit to fund the majority of purchases, according to research published in the Journal of Consumer Research.
The study found that using plastic to pay for a purchase rather than cash has a strong effect on how connected consumers feel to their purchases, in part because using credit is so much easier and less painful. “Debit and credit cards rule the marketplace and while going cashless is convenient, that convenience may come at a price,” said study co-author Avni Shah in a news release.
If consumers use cash, they’re more likely to feel strongly about their purchase and value it more highly. As a result, consumers may also be more likely to spend their money more conscientiously, say researchers, since they’re more connected to and aware of the purchases they’re making. When consumers use plastic, by contrast, they tend to be less appreciative and to rate their purchase less highly. Researchers are concerned that easier access to credit could cause cardholders to overspend. “There are shorter product life cycles and if consumers are feeling less connected to the products they’re already buying, just add easier access to credit and higher consumer debt levels and it’s a toxic combination,” says Shah.
Shah believe that consumers feel less connected to credit card purchases, in part, because paying for a purchase with plastic isn’t as distressing as parting with cash and so consumers don’t feel nearly as invested. Previous research has shown that consumers literally feel less pain when making a purchase with a credit or debit card. “You feel something when you physically part with your money and there are different levels of pain, depending on the type of payment, says Shah. “Something tangible like cash will feel more painful to part with than paying by check, which will feel more painful than paying by card.”
|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: July 20, 2016|
- Rate survey: Average card rate soars to record high of 17.02 percent – August 8, 2018: The average credit card interest rate shattered a major record this week, soaring past 17 percent for the first time ...
- Rate survey: Average card rate climbs to all-time high of 16.99 percent – August 1, 2018: The average credit card interest rate climbed to a record high Wednesday, according to the CreditCards.com Weekly Credit Card Rate Report ...
- Rate survey: Average card rate holds steady at 16.96 percent – July 25, 2018: The average credit card interest rate remained at a record high Wednesday, according to the CreditCards.com Weekly Credit Card Rate Report ...