Rate survey: Average card APR falls to 15.77 percent

Kelly Dilworth
Personal finance writer
Specializing in new trends in credit

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The national average APR for new card offers dropped to a four-week low Wednesday, according to the CreditCards.com Weekly Credit Card Rate Report.

The APR fell to 15.77 percent after remaining at 15.79 percent for two weeks. This is just the second time this year that the national average APR has declined in our weekly survey of 100 representative credit cards. The average rate increased 11 times this year.

Discover spurred this week’s rate change by cutting the lowest available APR on the Discover “it” card, by 2 percentage points. Cardholders are now offered a range of APRs starting at 11.74 percent and maxing out at 23.74 percent.

Discover’s previous offer of 13.74 percent appeared to be a test offer. The card issuer increased the “it” card’s minimum APR from 11.74 percent to 13.74 percent in early May. The offer lasted just a few brief weeks.

None of the other cards tracked by CreditCards.com altered rates this week.

Card issuers mail fewer offers
Consumers are receiving fewer credit card offers in their mailboxes, according to new research released by the financial firm Credit Suisse. Card issuers sent just 249 million card offers to prospective customers last month – down 35 percent from April 2016.

The number of card offers has declined every month this year, indicating that issuers are pulling back somewhat. In December 2016, by contrast, issuers mailed more than 300 million card offers.

After evaluating the number of offers mailed for the fourth month in a row, Credit Suisse downgraded its forecast for 2017. The financial firm now predicts roughly 3.9 billion credit card offers will be mailed out by the end of 2017, down 10 percent from the previous year.

“We believe 2016 was a particularly aggressive year with multiple new product introductions,” wrote Credit Suisse analysts Moshe Orenbuch and Serena Hong in a May 23 research note. “A number of cards with very competitive rewards were introduced in 2016, notably Citi’s Costco card, Chase’s Freedom Unlimited and Sapphire Reserve (which we note did not have direct mailing).”

Instead of mailing card offers directly to consumers’ homes, issuers may shift some of their marketing focus online, they added.

More rewards, fewer interest-free offers
On the plus side, more card offers now advertise some kind of rewards program, Credit Suisse found. For example, 72 percent of card offers contained some kind of rewards program in April, up significantly from last year.

However, fewer card offers advertised a promotional 0 percent purchase rate, indicating that card issuers have become slightly less generous about issuing interest-free credit. Out of the 249 million offers mailed last month, just 167 million – 67 percent – advertised a 0 percent interest rate on purchases. In April 2016, by contrast, 255 million credit card offers advertised a 0 percent purchase rate.

Slightly more card offers advertised an interest-free offer on balance transfers, however.

The amount of time cardholders were given to take advantage of an interest-free balance transfer offer also increased slightly. The average balance transfer offer gives cardholders roughly 14.4 months to pay off a transferred balance before the card’s promotional 0 percent interest rate expires – up from an average length of 14.1 months in 2016, according to Credit Suisse.

CreditCards.com's Weekly Rate Report
  Avg. APR Last week 6 months ago
National average 15.77% 15.79%
Low interest 12.62%
12.66% 12.00%
Cash back 15.84%
Balance transfer 15.07%
Business 13.66%
Student 13.92%
Airline 15.77%
Reward  15.81%
Instant approval 18.30%
Bad credit 23.23%
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: May 24, 2017

See related: Credit card issuer complaints rose 20 percent in 2016, Infographic: Card market continues climb, but subprime still in hole

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Updated: 02-16-2019