April 30, 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: 16.67 percent
• Average business credit card rate (non-reward) 14.72 percent
• Average business reward credit card rate: 16.21 percent

Average student credit card rates jumped 0.23 percentage points in the second half of April, while rates for business and consumer credit cards remained steady.

Inflation and credit card rates

April was a month with significant potential for change. In mid-month, the Consumer Price Index release for March showed that year-over-year inflation had risen to 2.7 percent. As of the end of 2010, it was only 1.5 percent. Despite this increase, consumer and business credit card offers have been virtually unchanged all year. In general, rising inflation tends to push interest rates higher, but this has not been the case with most categories of credit card offers so far this year.

On April 26, Ben Bernanke held a highly-anticipated press conference to discuss the completion of the Federal Reserve’s quantitative easing program, QE2. This program, which involved the purchase of $600 billion in U.S. Treasury bonds, was designed to keep market interest rates low, so the end of the program could lead to rising interest rates.

In short, except for student rates, credit card offers were steady in the second half of April, but credit card customers should remain alert to the potential for change in the weeks and months ahead.

Consumer credit card rates

Consumer credit card rates held steady at 16.82 percent in the second half of April, and have declined very slightly, just 4 points, since the start of the year. 2011 has been a very steady period for consumer credit card offers so far, with rates remaining in a tight range of 16.82 percent to 16.89 percent throughout the year so far.

As you might expect, each of the reward and non-reward categories of consumer credit cards mirrored the stability of the overall market for consumer cards, with no change in the second half of April, and a tight range of rates throughout the year so far. However, the overall trends of these two categories in 2011 have been slightly different: consumer non-reward rates have risen slightly since the start of the year, while consumer reward rates have seen a modest decline.

Business credit card rates

Business credit card rates remained at 14.72 percent for non-reward cards and 16.21 percent for reward cards. The only trend here is the remarkable stability in both categories. Average rates on business credit card offers have yet to show any fluctuation at all in 2011.

This stability underscores the value of shopping for credit card rates. While those rates can change at any time, the fact is that business card rates have not been changing over the past several months. This means that decisions about choosing a business credit card have had a lasting impact for those customers.

Student credit card rates

Student credit card rates rose 23 points to 16.67 percent during the second half of April. This increase continues a trend which has been in place for student credit card rates so far in 2011. In contrast to the steadiness of the consumer and business credit card rate categories, average student rates have now risen by a net total of 44 points since the end of 2010.

Good credit vs. average credit

With no change in consumer credit card offers during the second half of April, the relationship between offers for good credit and average credit customers remained stable during the period. Consumers with excellent credit enjoyed an average discount of 4.03 percent on credit card offers, compared with the overall consumer market.

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 Bank of America, HSBC, Citi, American Express.

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 04/30/11