Average Credit Card Rates Fall as Debt Rises
Credit card rates continue to fall as consumer debt climbs…
Following Federal Reserve’s latest interest rate cut - which set a two-year low - credit card rates continue to fall. It is speculated that many credit cards have hit their lowest levels and even if the Fed lowers rates again, many issuers may switch to fixed rates not linked to the prime rate to prevent further declines. Even so, consumers are finding that the lower rates are having little impact on their bottom-line as credit card debt continues to rise.
The following list of averages takes into account multiple tiers of interest rate pricing offered by most credit card issuers instead of just their lowest rates. The lowest listed rates, reserved for customers with excellent credit, fell to 9.4% for non-reward cards and 12.44% for reward cards. The following financial institutions are included in the averages: Advanta, American Express, Bank of America, Capital One, Chase, Citi, Discover, Pulaski Bank, U.S. Bank, National City, Washington Mutual, Wells Fargo and more.
- Non-reward Credit Card Rates: 12.59% - down from 13.01%
- Reward Credit Card Rates: 14.38% - down from 14.97%
- Student Credit Card Rates: 14.57% - down from 14.84%
- Business Credit Card Rates: 10.80% - relatively stable from 10.83%
- Business Reward Credit Cards: 12.14% - also stable from 12.16%
But even as rates decline, a report by TransUnion, one of the three major credit-reporting agencies, shows credit card debt is on the rise. Nationally, the average debt per credit card rose by 4.81% to $1,694 in the fourth quarter of 2007. Alaska holds the record for the largest average at $2,342 followed by Tennessee at $2,046 and Alabama at $1,996. The lowest average credit card debt was in Iowa at $1,272. Credit card loan delinquency (the percentage of bankcard users 90 or more days past due) hit a national average of 1.36 percent in the fourth quarter, up 32.04 percent over the previous period.
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