Average rates on new credit card offers rose this week for the
first time in more than two months, according to the
CreditCards.com Weekly Credit Card Rate Report.
The national average annual percentage rate (APR) climbed to
14.99 percent Wednesday, after hovering between 14.95 percent and
14.96 percent for 13 weeks. This is the first time since 2012 that
the national average has risen above 14.98 percent.
Unlike previous rate changes, however, this week's change was
spurred by a reshuffling of cards in the CreditCards.com database,
rather than by a new APR on an existing card. Occasionally,
CreditCards.com swaps out cards that have been discontinued or
taken offline by issuers and replaces them with similar offers.
This week, CreditCards.com removed three cards that were no
longer being promoted online: the Citi Gold Aadvantage Visa
Signature card, the BankAmericard Power Rewards Visa Signature card
and the Best Buy Rewardzone Platinum MasterCard.
CreditCards.com replaced these cards with the new BankAmericard
Better Balance Rewards card, which Bank of America introduced
earlier this year, the Citi Gold Aadvantage World MasterCard and
the Gap Visa card.
Credit offers abound
Over the past several months, credit card issuers have
substantially increased the amount they spend on marketing cards to
new customers. The number of credit card offers mailed to
consumers' homes, for example, has more than doubled since the
summer of 2012, according to research from Mintel Comperemedia,
which tracks credit card mailings.
Issuers have also spent significantly more resources on
adjusting offers and testing new promotions, according to
CreditCards.com data -- including adding extra-long 0 percent
balance transfer offers and purchase APRs to cards that previously
featured much more limited promotions. (American Express, for
example, recently added a 15-month, 0 percent balance transfer
offer to three of its flagship cards and extended the amount of
time cardholders can make interest-free purchases from 12 months to
Until recently, card issuers' aggressive marketing efforts
appeared to have little impact on cardholders' willingness to
spend. Revolving debt, which is nearly entirely made up of credit
card debt, for example, fell by nearly 4 percent in June, according
to Federal Reserve data, as more cardholders shied away from using
the credit they already had.
Cardholders' reluctance toward using credit may be wearing off,
as research released Aug. 30 by Equifax shows that cardholders'
appetite for new credit has increased substantially in the past
From January 2013 to May 2013, card issuers approved nearly $78
billion in new credit, according to the Equifax
National Consumer Credit Trends Report
-- up more than 6 percent since the same time last year. The same
report noted it was the first time in more than five years that
Equifax reported overall card balances had increased, year over
Card issuers also handed out 1 million more loans this year than
they did in the first five months of 2012 -- a sign that issuers
may also be loosening their standards for approving new
According to Equifax, issuers haven't approved this much new
credit since 2008, when the credit crisis forced banks to
substantially cut back on the amount of loans they could hand out
to new and current cardholders.
Consumer spending slows again
Cardholders' balances are unlikely to increase by too much,
however. Despite showing a renewed interest in new credit,
cardholders are still exceptionally careful about the amount they
are charging on their cards.
Consumer spending rose by just 0.1 percent in July, according to
research released Aug. 30 by the Commerce Department, after
climbing by 0.6 percent in June.
July's tepid growth in consumer spending surprised economists,
who predicted that consumers would spend much more that month --
particularly since consumer spending beat expectation in June.
Among 74 economists
by Bloomberg News, at least half predicted that consumer spending
would rise by 0.3 percent or more.
Consumers also had less to spend than originally forecast.
According to the Commerce Department, incomes rose by just 0.1
percent in July, which is just slightly less than economists
predicted. According to Bloomberg News, experts predicted incomes
would rise by at least 0.2 percent.
July's slowdown in consumer spending may have just been
temporary dip, however.
A separate report, released Sept. 3 by Gallup, showed that
consumers' self-reported discretionary spending rose significantly
in August, reaching its highest level in five years.
According to Gallup, consumers spent an average of $95 per day
on nonessentials -- up $6 from the previous month. "August's
stronger numbers come after a three-month period in which Gallup's
spending measure was generally flat," wrote Gallup's Jeffrey M.
Jones in a
announcing the data.
August's pickup in spending may have been due, in part, to
back-to-school shopping, said Jones. However, "both parents and
non-parents reported higher August spending, suggesting the
spending boost was a result of other factors."
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