September 30, 2014

Current averages:

• Average consumer credit card rate, overall market: 17.15 percent
• Average consumer non-rewards credit card rate: 15.48 percent
• Average consumer rewards credit card rate: 17.87 percent
• Average student credit card rate: 17.56 percent
• Average business non-rewards credit card rate: 14.99 percent
• Average business rewards credit card rate: 15.42 percent

The U.S. bank prime rate continues to hold firm at 3.25 percent.

All the categories of credit card offers tracked by this survey were unchanged in the second half of September. With the final quarter of the year starting, this is a good time to look ahead at factors that could affect credit card rates for the remainder of the year. Rate watchers should pay particular attention to the following:

1. Economic growth. Key announcement to watch is the Employment Situation report from the Bureau of Labor Statistics (BLS) on Oct. 3. See if monthly job growth can bounce back above 200,000 after a sub-par August. Otherwise, interest rates may continue to sag.
2. Inflation. The BLS releases the latest Consumer Price Index figures on Oct. 22. Inflation has been tame, but any flare-up could put upward pressure on rates. In the meantime, keep an eye on oil prices as an early indicator of where inflation may turn next.

One point to note about the stability in advertised credit card rates — many cards have wide spreads between the lowest and highest ranges of rates they offer. Thus, credit card companies have built themselves something of a cushion that allows them to adjust to rate changes without formally changing their advertised rates. Consumers should keep in mind that even in an environment without much apparent change, the credit conditions they experience individually can be very different from one month to the next.

Consumer credit cards

Both the rewards and non-rewards categories of consumer cards were unchanged over the latter half of September. However, that lack of rate action should not suggest that there is no value in consumers actively shopping for rates. While credit card rates have been stable lately, the market for those rates represents a wide range of levels. That wide range can benefit some consumers, while it can cost others.

For example, even for customers with strong credit histories, rates from different cards frequently vary by two or three percentage points, and there are similar differences in the most expensive rate tiers as well. The point is that even in a stable market, there are significant variances that make it worth shopping around.

Student credit cards

The average rate for student credit cards remained at 17.56 percent, having not changed since February.

Business credit cards

Non-rewards business credit cards and rewards credit cards were both unchanged in late September, leaving the average difference between rates for the two categories at just 0.43 percent. This is much lower than the spread between rewards and non-reward rates for consumer credit cards, indicating that the potential cost of rewards programs can be much lower for businesses.

Excellent credit vs. average credit

The difference between the average credit card rate offered to customers with excellent credit and the overall average for all credit card offers remained at 3.98 percent. This difference is worth noting for credit card shoppers. Since it represents the difference between the best credit card rates and the average, it represents roughly half of the total spread between the lowest and highest rate tiers. That spread, which represents the difference in rates offered depending on credit history, exceeds 10 full percentage points in some cases.

The message for credit card shoppers, then, is to be sure to compare credit offers based on your particular credit status, because if you have a history of credit problems, the rate you are quoted may vary greatly from the best rates advertised.

In total, IndexCreditCards.com surveys information from nearly 50 different credit cards, and includes multiple credit-rating tiers from many of those cards. Examples of offers surveyed include American Express, Capital One, Chase, Citi, Discover, and other MasterCard and Visa branded cards. The information compiled not only demonstrates trends in credit card rates over time, but also indicates the different values credit card companies put on different target markets (consumer, business, etc.), as evidenced by the differences between rates for those markets.

Published 09/30/14