Interest rates on new credit card offers rose to a near record high this week after Citi boosted rates on multiple cards, according to the CreditCards.com Weekly Credit Card Rate Report.
More than a week after the Federal Reserve increased the federal funds rate by 0.25 percent, Citi hiked APRs on its credit cards by the same amount. As a result, the national average APR rose to 15.07 percent — one of the highest average APRs ever recorded by the CreditCards.com Weekly Rate Report.
Card issuers are acting quickly to pass along the Fed rate hike to their customers with variable rate cards, as allowed under federal law. Among the 100 cards tracked by CreditCards.com, 34 have increased their rates since the Fed’s action, all by the same quarter point.
Clearing debt ranks high on list of New Year’s resolutions
As cardholders’ payment obligations rise alongside the Federal Reserve’s rate increase, many cardholders are resolving to clear their debt for good.
According to a December 2015 survey by the life insurance company Allianz Life, 41 percent of respondents promise to handle their money more skillfully in 2016. Meanwhile, 37 percent of consumers surveyed by Fidelity Investments plan to focus on a specific financial resolution, such as save more money or finally pay off their debt.
A larger number of consumers are also focusing on their credit cards this year, according to Fidelity Investments. Eleven percent of consumers who made a financial resolution this year said their main priority is paying off credit card debt — up from 5 percent in 2014.
Meanwhile, a significant number also say they need to overcome some bad financial habits, which could be making it harder to whittle down bloated card balances.
For example, 29 percent of consumers surveyed by Allianz Life say they currently spend too much money on items they don’t need, while 19 percent say they spend more money than they take in. Meanwhile, 28 percent admit they don’t save as much money as they could, while 26 percent confess they don’t save at all.
A substantial number of consumers also admit they could use more financial guidance, with nearly 40 percent saying they’d opt for financial help if given the choice of free assistance from a personal trainer, a nutritionist or some sort of financial professional.
In addition, many said that in order to have a financially healthier 2016, they need to focus on paying down credit card debt, building a fatter emergency fund and devising an effective budget.
“Financial health weighs heavily on people’s minds,” said Allianz Life’s Katie Libbe in a Dec. 29 news release. People are not only concerned about their personal financial health, they’re also still worried about the long-term health of the economy. “Stagnant wages were a top concern,” said Libbe. “And one in three respondents reported they fear another major recession may happen in 2016.”
|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: Dec. 30, 2015|