Rate survey: Average card rates hold steady at 15.01 percent
By Kelly Dilworth | Published: October 21, 2015
Interest rates on new credit card offers stayed still Wednesday, according to the CreditCards.com Weekly Credit Card Rate Report.
The national average annual percentage rate (APR) remained at 15.01 percent after increasing the previous week for the first time in more than three months.
None of the card offers analyzed by CreditCards.com advertised new interest rates. Issuers left introductory balance transfer offers and short-term APRs unchanged as well.
Changes to credit card offers have been rare this year. The national average APR, for example, has changed just seven times since Jan. 1. Card issuers were somewhat more active in 2014, but changes to new credit card offers were still relatively unusual. Between Jan. 1, 2014, and Oct. 21, 2014, for example, the national average changed just 10 times. By the end of the year, average APRs changed 16 times.
Before the Credit CARD Act of 2009 went into effect in February of 2010, changes to credit card terms were more typical. However, card issuers have become more reluctant in recent years to lower credit card interest rates -- in part because they have less flexibility to change them after a cardholder accepts an offer. The Credit CARD Act of 2009 restricts interest rate increases by requiring card issuers to give at least 45 days' notice before increasing a customer's interest rate. Consumers also have the right to opt out of an interest-rate increase by closing their accounts.
Income, education may affect credit card offers
How much money you make and how many years of education you received could influence the types of credit card offers you receive in the mail, according to preliminary research from MIT.
Researchers at MIT's Sloan School of Management recently analyzed over a decade's worth of credit card mailings collected between 1999 and 2011 by the market research company Mintel Comperemedia and found a significant association between consumers' income and education levels and the types of offers they received.
Not surprisingly, consumers with higher incomes were more likely to be offered lower credit card interest rates, but they also tended to receive fewer 0 percent introductory offers than cardholders with lower incomes. In addition, consumers with less education and lower incomes were more likely to receive riskier credit card offers, with higher late fees and penalty APRs.
Study authors Hong Ru and Antoinette Schoar theorize that card issuers may differentiate their offers based on how likely consumers are to understand their credit cards' terms. "Credit card issuers use different credit card features to separate more sophisticated from less sophisticated customers," wrote Ru and Schoar in an early version of the report. "For example, low introductory rates are offered to less educated and poor customers, while miles are offered to more educated and richer customers." Consumers with higher incomes are also significantly more likely to receive rewards card offers that award cash back or points.
In addition, the study found that rewards cards offered to lower income consumers tended to come with higher back-end fees, such as late fees. But card issuers appeared to send these types of offers only when cardholders' finances were sturdy enough to withstand more expensive credit. For example, cardholders were more likely to receive riskier credit card offers with introductory teaser rates and higher penalties when their finances were less risky.
"These results suggest that credit card companies realize there is an inherent trade-off in the use of backward-loaded features of credit card offers: They might help in inducing customers to take on more (expensive) credit, but at the same time they expose the lender to people who pose a greater risk."
|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: Oct. 21, 2015|
Last week's survey: Rates rise to 15.01 percent
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