Interest rates on new credit card offers shot up this week,
according to the CreditCards.com Weekly Credit Card Rate
The national average annual percentage rate (APR) rose to 14.98
percent Wednesday after Chase introduced an increase in the lowest
available APR on the Chase Freedom card by 3 percentage
The Chase Freedom card previously featured a range of possible
APRs, starting at 13.99 percent and topping out at 22.99 percent.
It now also features a card with just one flat rate of 16.99
The national average was also impacted this week by a
reshuffling of the CreditCards.com database. Occasionally,
CreditCards.com updates the database in order to more accurately
reflect the current market.
This week, CreditCards.com updated the categories for several
cards, causing the average APRs for those categories to change. We
also replaced a discontinued card for sporting enthusiasts with a
similar card that featured a slightly higher APR.
Issuers revive marketing efforts
After months of inactivity, issuers have been busier than usual in
recent weeks. For example, this is the third week out of six that
the national average has changed due to an issuer making changes to
a card offer.
Previously, card offers remained unchanged for months at a time,
with issuers making few if any changes to credit card APRs or to
In addition to tinkering with new card offers, issuers also
appear to be ramping up their marketing efforts this year after
cutting back significantly in 2012.
For example, issuers mailed nearly 30 percent more credit card
offers to consumers in April compared to the same time last year,
according to new data from Mintel Comperemedia, which tracks credit
Experts predict that credit card mail volume will continue to
remain strong throughout the year as issuers compete more heavily
for new business. In a research note released Tuesday, analysts at
the financial services firm Credit Suisse predicted that, by the
end of this year, issuers will have sent 10 percent more card
offers to consumers' mailboxes than they did in 2012.
"We believe 2013 will see increasing competition for revolving
balances," wrote analysts Meredith Roscoe and Moshe Orenbuch in the
Consumers cut back on debt
Consumers, however, may not be interested. They opened
significantly fewer credit card accounts in the last three months
of 2012 than they did the previous year, according to new research
from the consumer reporting agency TransUnion.
Consumers are still opening more accounts these days than they
did in the first few years after the recession, according to
TransUnion. However, their appetite remains weak.
In addition to opening fewer accounts, cardholders are also
carrying less debt from month to month and are leaving less debt on
their cards than they used to. Average credit card balances fell by
nearly 2 percent (1.7 percent total) in the first quarter of 2013,
compared to the same time last year, according to TransUnion. The
average credit card holder currently carries about $4,878 in credit
card debt, down from $4,962 in the first quarter of 2012.
TransUnion's latest study of consumer credit reports also found
that cardholders are continuing to repay their debts on time and
aren't letting one-time surges in debt last for longer than a few
months. For example, cardholders successfully paid down at least
part of their holiday balances this year, trimming their average
debt loads by around $244 between the fourth quarter of 2012 and
the first quarter of 2013.
Late payments on credit cards also fell in the first quarter of
2012, as they usually do in the first three months of the year,
according to TransUnion.
"We traditionally see credit card delinquencies and balances
decline during the first three months of the year as many people
pay down their holiday shopping balances or use their tax refunds
to pay off their debts," said TransUnion's Ezra Becker in a
statement accompanying the report.
The lower levels of card debt compared to 2012 shows that
cardholders are remaining exceptionally conservative about how they
handle credit. "In addition to the seasonal quarter-over-quarter
drop, the year-over year improvement in credit card delinquencies
is indicative of how consumers continue to value their credit card
relationships," said Becker in the release.
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