Research and Statistics

Credit card interest rates grow to 15.06 percent


Aug. 27, 2014: Average credit card interest rates rose this week for the first time in nearly two months, according to the Weekly Credit Card Rate Report.

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Avg. APR Last week 6 months ago
National average15.06%15.03%15.01%
Low interest10.37%10.37%10.33%
Balance transfer12.73%12.64%12.66%
Cash back14.94%14.91%14.84%
Instant approval28.00%28.00%28.00%
Bad credit22.73%22.73%22.73%
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: Aug. 27, 2014

Average credit card interest rates rose this week for the first time in nearly two months, according to the Weekly Credit Card Rate Report.

The national average annual percentage rate (APR) inched up to 15.06 percent Wednesday after remaining at 15.03 percent for seven consecutive weeks.

Wells Fargo prompted this week’s rate change by hiking APRs on two of its rewards credit cards. Wells Fargo increased the lowest available APR on the Wells Fargo Rewards Card from 12.15 percent to 14.15 percent. It left the card’s maximum available rate alone at 25.99 percent.

The issuer also narrowed the range of possible APRs for the Wells Fargo Cash Back Card by increasing the lowest available APR by 1 percentage point. Applicants may now qualify for an APR as low as 13.15 percent or as high as 25.99 percent, depending on their creditworthiness.

Late payments on credit cards plunge to record lows
Credit card holders continue to defy expectations and are getting even better at paying their bills on time. Late payments on credit cards fell again last quarter to a record low, according to TransUnion’s latest Industry Insights Report.

Consumers across all age groups repaid their credit cards at record rates last quarter, defying analysts who predicted late payments would rise as the year went on. According to the report, the credit card delinquency rate fell, year over year, from 1.27 percent of all accounts in the second quarter of 2013 to 1.16 percent of all accounts in the second quarter of 2014.

As 2013 drew to a close, some analysts surmised that credit card delinquencies (late payments by 30 days or more) were already so rare they were unlikely to decline any further.

“Consumers continue to have a good handle on their credit cards, with delinquencies at all-time lows across the spectrum,” said TransUnion’s Ezra Becker in an August 26 press release. “We observed that delinquency rates are dropping for all age groups, and at relatively similar rates.”

The ongoing drop in the card delinquencies is especially significant given that lenders have become somewhat more lenient with the amount of credit they’re willing to give to new and current cardholders. For example, some lenders have granted more cards to consumers with less-than-perfect credit scores. Others have increased cardholders’ credit limits, giving them more room to rack up debt.

According to TransUnion’s Toni Guitart, the fact that lenders are continuing to raise credit limits indicates that many lenders are relatively confident about cardholders’ finances and expect to be paid back. It “points to lenders feeling they can take on more risk while giving consumers a bigger credit cushion,” said Guitart in the release.

Lenders are also approving more accounts. According to TransUnion, lenders opened nearly 18 percent more credit card accounts in the first quarter of 2014 than they did in the first few months of 2013.

Baby boomers pile on slightly more debt
Most credit card holders are keeping their credit card balances relatively low, giving lenders even more confidence about consumers’ ability to repay what they’ve already borrowed.

For example, according to TransUnion, the average card balance for cardholders under the age of 30 remained essentially unchanged between the spring of 2013 and the spring of 2014. The average 20-something currently carries approximately $2,135 in debt.

Meanwhile, cardholders between the ages of 30 and 49 are carrying slightly less card debt this year than they did in 2013, indicating to analysts that many cardholders are still squeamish about taking on more debt than they can handle. For example, the average card balance for 30- to 39-year-olds fell from $4,871 in the second quarter of 2013 to $4,816 in the second quarter of 2014.

Consumers between the ages of 40 to 49 also saw a slight decrease in the amount of debt sitting on their cards. The average 40-something now carries an average balance of $6,713, down from $6,724 in 2013.

Cardholders over the age of 50, by contrast, increased the amount of debt they carried. The average card balance for 50- to 59-year-olds rose by a little over half a percent in 2014, from $6,765 to $6,805.

Older cardholders saw an even steeper increase. Cardholders age 60 and above now carry an average of $4,891 on their cards, up from $4,802 in 2013.

According to TransUnion’s Ezra Becker, middle-aged cardholders typically carry the largest balances because they usually have bigger credit limits and more expenses. “Traditionally, consumers carry heavier debt loads between the ages of 40 and 60 as they are in their peak purchasing years,” said Becker in the release. “They also tend to spend more on items such as new cars, home furnishings [and] college tuition for their children.”

See related:Banks loosening grip on credit cards, says Fed surveyFed: Card balances rise, keep pace with slow spending growth

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Published: August 27, 2014

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Credit Card Rate Report Updated: August 14th, 2019
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