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Survey: Card rates stuck at 15 percent for a record 12th week

Summary

Sept. 9, 2015: For a record 12th week, interest rates on new credit card offers remained stuck in place, according to the CreditCards.com Weekly Credit Card Rate Report

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Interest rates on new credit card offers remained stuck in place again this week, according to the CreditCards.com Weekly Credit Card Rate Report.

None of the cards monitored by CreditCards.com advertised new interest rates. As a result, the national average annual percentage rate (APR) remained at 15 percent for the 12th consecutive week.

This is the longest stretch of time interest rates have remained in place since CreditCards.com began tracking rates in mid-2007. Long periods without a rate change have become more common in recent years, thanks in part to the Credit CARD Act of 2009. The law curbed issuers ability to re-price accounts without first giving cardholders 45 days’ notice. Issuers responded by lowering advertised rates less often. Since then, the number of weeks that go by without a rate change has substantially increased.

Card debt expands to almost 6-year high
Consumers aren’t shying away from using their cards anymore.

According to the Federal Reserve’s consumer credit report released this week, card balances expanded in July to their highest point in nearly six years.

For the fifth consecutive month, credit card balances increased — this time at an annualized rate of nearly 6 percent. Total consumer credit also rose in July as more people embraced the use of loans to finance major purchases.

Despite piling on more debt, a record number of consumers are continuing to repay their loans at record rates, surprising analysts who predicted that missed payments on credit cards and other types of loans were destined to increase.

According to a separate analysis by the company Trefis, for example, all seven of the nation’s biggest card issuers — American Express, Chase, Bank of America, Citi, Capital One, U.S. Bank and Discover — have enjoyed substantially larger purchase volumes in recent months as consumers lean more heavily on their cards. However, credit card charge-offs — which measure debt that hasn’t been paid and that banks believe is uncollectable — remained near historic lows.

“While there has been a notable increase in card balances over recent quarters, the fact that charge-offs have remained steady indicates that the growth in payment volumes has not come at the price of increased credit risk for card lenders,” said Trefis in a Sept. 8 research note.

That’s good news for lenders because it means they can continue to expand their lending without worrying too much about being stiffed by cardholders. Until recently, lenders were exceptionally strict about who they approved for a card.

According to a Sept. 9 report from the American Bankers Association, for example, the number of new card accounts belonging to cardholders with low credit scores has increased significantly this year. The total number of bank-issued cards belonging to a cardholders with subprime credit scores rose to 60,000 in the first quarter — which is the most recorded by the American Bankers Association in three years.

However, lenders have also kept a tight rein on those cardholders by scaling back how much they can borrow, according to an August 2015 report from TransUnion. As a result, cardholders who have slipped up in the past have regained access to credit, but don’t have as much freedom this time around to borrow more than they can afford.

“Banks continue to create opportunities across all categories with a prudent approach that opens the door for millennials with no credit history as well as those who have had difficulty managing credit in the past,” said the American Bankers Association’s James Chessen in a Sept. 8 news release. “By offering lower initial credit lines that can increase over time with a good payment record, card issuers have responsibly expanded access to credit cards in a manner that benefits both consumers and the broader economy.”

CreditCards.com’s Weekly Rate Report
Avg. APRLast week 6 months ago
National average15.00%15.00%14.87%
Low interest11.62%11.62%11.53%
Cash back15.27%15.27%15.26%
Balance transfer14.12%14.12%14.00%
Business12.85%12.85%12.85%
Student13.14%13.14%13.14%
Airline15.10%15.10%15.15%
Reward15.14%15.14%14.99%
Instant approval18.00%18.00%17.93%
Bad credit22.73%22.73%22.48%
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: Sept. 9, 2015

See related:Household debt report: Credit card balances highest since 2010

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Published: September 8, 2015

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Credit Card Rate Report Updated: September 18th, 2019
Business
15.45%
Airline
17.38%
Cash Back
17.52%
Reward
17.39%
Student
17.58%

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