Interest rates on new credit card offers remained stable this
week, according to the CreditCards.com Weekly Credit Card Rate
The national average annual percentage rate (APR) on new card
offers stayed fixed at 14.91 percent Wednesday.
However, not all issuers left their card offers alone this week.
For example, the retail store L.L. Bean sweetened the balance
transfer offer on its L.L. Bean Visa card. The store credit card
previously featured a 0 percent balance transfer offer for six
months. Now, applicants can transfer their balance from another
card to the L.L. Bean Visa card and pay zero interest on the
balance for 12 months.
The longer balance transfer period on the L.L. Bean Card is good
news for consumers who want to finance their purchases at 0 percent
interest for a longer period. Among the store credit cards that
CreditCards.com tracks, the L.L. Bean Visa card is one of the only
retail cards that offers some sort of 0 percent financing.
The retail store Cabela's also modified the maximum APR
available on the Cabela's Club Visa card. The card previously
featured an APR range of 9.99 percent to 18.23 percent. Now, the
card offers a maximum APR of 18.24 percent.
Cabela's spokesman Joe Arterburn confirmed that the rate change
on the Cabela's Club Visa was due to a change in the London
Interbank Offered Rate (Libor) rate. The Libor rate is the British
equivalent to the U.S. federal funds rate. When the Libor rate
moves, variable rate credit cards, such as the Cabela's club Visa
card, that are tied to the Libor rate move with it.
The rate change on the Cabela's Club Visa card didn't affect the
national average, however, because CreditCards.com only considers
the lowest rate possible rate when calculating average interest
Cabela's doesn't offer any promotional deals on its Cabela's
Club Visa. However, with a rate starting at 9.99 percent, it
features one of the lowest APRs on the market.
Store cards often come with notoriously high APRs
Cabela's low interest rate for consumers with excellent credit is
unusual for store cards. Retail store credit cards are among the
costliest credit cards available to consumers, regardless of their
credit score, according to CreditCards.com data. For example, among
the retail cards that CreditCards.com tracks, the average APR for
consumers with the best credit is 17.37 percent. The average APR
for consumers with the worst credit, meanwhile, is 22.40
To get a sense of just how high those average rates on store
credit cards are, consider this: A consumer who borrows $5,000 on a
store credit card and pays $100 monthly at 17.37 percent interest
will have to pay a whopping $3,952 in interest charges to clear the
balance. That's $1,407 more than the consumer would have to pay if
the consumer qualified for the best rate on the Cabela's club card.
(Calculator: How long will it take to pay off your credit card
Meanwhile, if a consumer has a less-than-perfect credit score
and only qualifies for the highest APRs on store credit cards, the
consumer could wind up paying more in interest than was borrowed in
the first place (providing the consumer doesn't pay off the entire
balance every month). For example, a consumer who borrows $5,000 on
a store credit card and pays $100 monthly at 22.40 percent interest
will have to pay $9,643 in interest charges to reach a zero balance
on the card. That's nearly twice the amount that was originally