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Credit card rates give back some of last month's gains


April 15, 2011

Current averages:

  • Average consumer credit card rate, overall market: 16.82 percent
  • Average credit card rate, non-reward consumer cards: 15.27 percent
  • Average consumer reward credit card rate: 17.48 percent
  • Average student credit card rate: 16.44 percent
  • Average business credit card rate (non-reward) 14.72 percent
  • Average business reward credit card rate: 16.21 percent

Business leaders value stability when making decisions about the future, and credit card offers so far this year seem geared towards giving businesses the stability they crave. While average credit card rates for consumers and students changed yet again in the latest IndexCreditCards.com survey, credit card offers for businesses remained stable, as they have done so far this year.

IndexCreditCards.com surveys credit card rates twice a month, and so far this year, consumer credit card rates have changed five times, and student rates have changed three times, but business rates have not changed at all. This may be recognition that business customers value consistency, or it may simply mean credit card companies are finding the business market more stable than the consumer or student markets.

In any case, there is no doubt that credit card companies cater to the business market, as rates for business credit cards continue to be lower than their consumer and student counterparts.

Consumer credit card rates

The overall average for consumer credit card rates dropped seven basis points to 16.82 percent. The reward and non-reward categories of credit cards each experienced similar declines, with reward credit card rates falling seven basis points to 17.48 percent, while average non-reward consumer credit card rates fell eight basis points to 15.27 percent.

This change does not represent any kind of a trend, because all it did was reverse identical small increases in credit card rates in the last IndexCreditCards.com survey. A plausible interpretation of this flip-flop is that while credit card companies are getting nervous about rising inflation, it is difficult to exercise pricing power in a market as competitive as credit cards. With the consumer sector strengthening, credit card companies would be reluctant to lose market share by being the first to raise rates at this time.

Business credit card rates

As noted previously, business credit card rates have enjoyed a sustained stretch of stability, with business reward credit cards remaining at 16.21 percent, and non-reward business cards at 14.72 percent, since before the end of 2010.

Even so, business customers should not assume this lack of change in average rates means there are no differences within the market. Indeed, that surface calm belies huge disparities in individual business credit card rates. The difference between the lowest and highest rates in the business non-reward category is 11 percentage points, and the difference from low to high in the business reward category is even greater. So, despite the stability of this market, business customers need to shop carefully when looking for a credit card.

Student credit card rates

Student credit card rates dropped slightly, by four points to 16.44 percent. Given that these rates had risen eight points in the previous survey, this latest drop simply means that student credit card rates have given back half of a recent increase. In any case, these changes have been small, though student credit card rates have seen the biggest increase of any category so far this year, rising 21 points to 16.44 percent in the early part of 2011.

Good credit discount

Overall, the discount in credit card rates for consumers with excellent credit grew slightly, averaging 4.03 percent compared to 4.00 percent in late March. This was due to an increase in the average discount among non-reward cards to 4.19 percent compared to last month's 4.10 percent. The greater the average discount, the more consumers are being rewarded for maintaining excellent credit.

About the survey

In total, IndexCreditCards.com surveys information from some 50 different credit cards, and includes multiple credit-rating tiers from many of those cards. Examples of institutions surveyed include HSBC, Citi, American Express, and Capital One.

The information compiled not only shows 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 04/15/11 (Modified 05/14/14)

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