Credit card interest rates decline to 14.95 percent

Sienna Kossman
Personal finance writer
Statistics enthusiast focused on data-driven content's Weekly Rate Report
  Avg. APR Last week 6 months ago
National average 14.95% 14.98%
Low interest 10.37%
10.37% 10.37%
Cash back 14.94%
Balance transfer 12.73%
Business 12.85%
Student 13.14%
Airline 15.46%
Reward  14.89%
Instant approval 23.33%
Bad credit 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: Dec. 3, 2014

Average rates on new card offers declined slightly this week, according to the Weekly Credit Card Rate Report.

The national average annual percentage rate (APR) decreased to 14.95 percent Wednesday as a result of a database card change.

The Chase Sapphire card, which is no longer available online, was replaced with the Amex EveryDay Credit Card, which has a variable purchase APR of 12.99-21.99 percent.

Card issuers did not adjust promotional rates or annual fees this week.

Average rates are still at their lowest since September 2013, when the national average hit 14.99 percent. The 2014 national average APR is holding steady at 15.03 percent.

Fed preps for 2015 interest rate hike
As the U.S. economy continues to rebound from the recession, federal officials get ready to impose the first interest rate increase since 2005.

The federal funds rate, which is the base for the prime rate that most credit card issuer's build their variable purchase APRs upon, has been at its lowest point -- 0.25 percent -- since December 2008. The national yearly average APR for new card offers has increased only 0.72 percent since 2010, from 14.31 percent to this year's 15.03 percent average, according to Weekly Credit Card Rate Report historical data.

When the prime rate rises, so will APRs on variable rate credit cards, and federal officials believe it's nearly time for such changes, according to statements made Monday.

"The big issues we're discussing now is lift off of interest rates -- when is that going to happen, how is it going to be done," said Federal Reserve Vice Chairman Stanley Fischer, according to The Wall Street Journal.

The when and how plans for raising interest rates will depend on how the economy continues to grow. Fischer said he believes the U.S. has seen a "real recovery" with economic growth fluctuating between 2-2.5 percent and the years of low interest rates have worked to helped spur that growth.

Federal Reserve Bank of New York President William Dudley is also optimistic about economic recovery, but stressed the importance of seriously considering financial conditions before making any rate changes in a speech given at Bernard M. Baruch College this week.

The decision to raise rates will depend "on how the economic outlook evolves, particularly with respect to the labor market and inflation," he added.

Lack of wage growth has been a point of concern this year, but Fischer said he believes if we wait a little longer, a pickup isn't far off.

Based on current market expectations, officials believe interest rate increases will begin mid-2015.

Card volume, balances grow
The number of new credit cards issued in the third quarter of 2014 increased 35 percent year-over-year, according to the third-quarter 2014 Experian-Oliver Wyman Market Intelligence report. Card balances also increased 5 percent year-over-year.

However, consumers with super prime and prime TransUnion VantageScores continue to open more cards than subprime and deep subprime cardholders, whose bank card origination volume trend lines remain fairly flat.

Super prime and prime score holders opened $44.1 billion and $36.5 billion in new cards last quarter, respectively. Subprime and deep subprime score holders opened significantly less, coming in at $2.3 billion and $1.3 million, respectively.

Experian's numbers are similar to data released by the New York Federal Reserve last month,  which showed that those with lower credit scores are still feeling reluctant to apply for new lines of credit.

However, credit card balances have risen as the economy improves and unemployment decreases. Credit card balances rose to $627 billion in the third quarter while the unemployment rate decreased to 5.9 percent, according to the Q3 Experian report.

Credit card delinquencies also remain near all-time lows.

See related: Card applications fall among younger, lower-score consumers

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Updated: 01-23-2019