Interest rates on new credit card offers stayed put this week, according to the CreditCards.com Weekly Credit Card Rate Report.
None of the issuers tracked by CreditCards.com revised APRs on new card offers. As a result, the national average annual percentage rate remained fixed at 15 percent for the 14th consecutive week. Issuers also left promotional APRs and interest free balance transfer offers unchanged for the fourth consecutive week.
The past 14 weeks represent the longest unbroken period in which average rates haven’t changed since CreditCards.com began tracking rates in mid-2007. Over the past three months, issuers have edited a handful of promotional offers, but have left most card terms alone. The sporting goods store Cabela’s tweaked the APR on the Cabela’s Club Visa in early September after the LIBOR rate increased, but it didn’t affect the national average.
Anticipation builds over upcoming rate hike
The Federal Reserve decided again last week to hold off on raising a key benchmark interest rate that affects most variable rate credit cards. However, comments made this week by several members of its rate-setting Federal Open Market Committee indicate that a rate change could be in the works as soon as next month.
The committee will meet again in October before conducting its final meeting of the year in December. Many analysts expect that if the Fed calls for a rate increase before the end of the year, it will do so in December. But at least four voting members of the committee have spoken since last week’s meeting and have hinted that the committee is coming closer to a consensus that it’s time to increase rates — at least before the end of the year.
On Monday, Atlanta Federal Reserve Bank President Dennis Lockhart said his vote last week to leave rates alone was largely due to recent events, rather than concerns about the overall health of the U.S. economy. “I put most of my decision weight on prudent risk management around recent and current market volatility,” said Lockhart in a Sept. 21 speech at the Buckhead Rotary Club. “As things settle down, I will be ready for the first policy move on the path to a more normal interest-rate environment. I am confident the much-used phrase ‘later this year’ is still operative.”
Meanwhile, Federal Reserve Bank of San Francisco President John C. Williams also said on Saturday that the decision to leave rates alone was a close one. “It was a close call in my mind, in part reflecting the conflicting signals we’re getting,” said Williams in a Sept. 19 speech in Armonk, New York. “The U.S. economy continues to strengthen, while global developments pose downside risks to fully achieving our goals.”
Despite those risks, the U.S. economy has made enough progress to support a gradual rate hike, says Williams. “Given the progress we’ve made and continue to make on our goals, I view the next appropriate step as gradually raising interest rates, most likely starting sometime later this year.”
According to projections released last week, the majority of committee members still think rates should go up before 2016.
Federal Reserve Bank of St. Louis President James Bullard said in an interview with CNBC on Monday “there’s a chance” the committee could raise rates in October, but it depends on what happens before then. “There’s a powerful case to be made that it’s time to raise interest rates. And the case is not complicated,” said Bullard in the interview. “Policy settings are an emergency. The economy itself, the goals of the committee, have essentially been met.”
When the federal funds rate does increase, rates on variable rate loans, including credit cards tied to the prime rate, will automatically go up as well.
Cardholders worried about a sudden rate hike shouldn’t worry too much, though. The next Federal Reserve rate increase — the first in more than nine years — will be small. Policymakers are expected to boost rates by just 0.25 percent.
|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: Sept. 23, 2015|