Interest rates rise as credit card issuers tweak offers
Interest rates on new credit card offers rose this week, according to the CreditCards.com Weekly Credit Card Rate Report, as banks continued to tweak card offers amid a changed lending environment.
|CreditCards.com's Weekly Rate Report|
|Avg. APR||Last week||6 months ago|
|Methodology: The national average credit card APR is comprised of 95 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.)|
The national average interest rate on new credit card offers increased to 14.70 percent, according to the CreditCards.com Weekly Credit Card Rate Report. That advance followed a number of changes to card offers, including a higher annual percentage rate (APR) on one product, as banks continue to adjust to a difficult economic and regulatory environment.
Among the recent changes, the eBay MasterCard APR increased from a range of 19.99 percent to 23.99 percent, to a flat 26.99 percent, while a number of other banks either reintroduced or removed card offers. When such changes occur, the offers in the CreditCards.com database are updated to maintain an accurate picture of the credit card marketplace.
Banks have attributed their adjustments to the tough economy and the Credit CARD Act, which restricts rate increases on existing plastic, but doesn't limit APRs for new credit card offers.
The Federal Reserve noted those ongoing lending adjustments in minutes, released Tuesday, from its most recent meeting in March. Bank lending "was still contracting and interest rates on many bank loans had risen further in recent months," the central bank said.
That shouldn't surprise credit cardholders, who are paying higher borrowing costs. A typical cardholder who borrowed $5,000 on a credit card today and consistently paid $150 per month at today's average interest rate would have to pay $6,466 to pay off the debt. That's $285 more than would have been required six months earlier. (Calculator: How long will it take to pay off your credit card balance?)
See related: Credit card reform arrives in the form of the Credit CARD Act, A guide to the Credit CARD Act of 2009, What's NOT covered by the credit card reform law, Calculator: How long will it take to pay off your credit card balance?
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