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Credit Card Rates Climb, But Could See A Leveling Off

by Peter Andrew

NOTE:

To offer our weekly summary of credit card rates, Credit

Card Monitor, in your publication or on your Web site, please

contact syndicate@indexcreditcards[dot]com.

 

Credit Card Rates

Climb, But Could See A Leveling Off

While

credit card rates continued to climb this week, there may be

a leveling off in the short term.

"This

week, Chase became the last of the major financial institutions

to hike their rates in response to last month's federal rate

increase, so rates should stay steady in the short term" said

Adam Jusko, Research Director for IndexCreditCards.com.

"And with Ben Bernanke announced as Alan Greenspan's successor

as Federal Reserve chairman, many are speculating that Bernanke

will be slower to push for interest rate hikes."

Many credit cards are variable-rate, meaning their interest

rates are based on a formula that includes a base rate plus

a percentage tied to federal lending rates. When federal rates

fluctuate up or down, credit card rates increase or decrease

in response.

This week's average credit card rates:

    • "Top-level"

    consumer credit cards averaged a 9.72% Annual Percentage Rate

    (APR), up slightly from 9.70%. The lowest rate found for consumer

    credit cards with no annual fee was the Capital One Platinum

    MasterCard, offering a 5.9% APR.

    • Top-level

    business credit cards, which more often use fixed interest

    rates, remained at an average 9.91% APR for the second straight

    week. The lowest rate for business credit cards with no annual

    fee was the Advanta Platinum BusinessCard, offering a 7.99%

    APR, as well as a program with travel or cash back rewards.

    IndexCreditCards.com uses "top-level" to describe Platinum or

    similarly designated credit cards that generally offer the lowest

    interest rates to eligible cardholders.

    Other rates of note:

      • Reward

      credit cards for consumers averaged a 10.85% APR, up slightly

      from 10.84% last week. The lowest APR in this group belonged

      to the MBNA Rewards American Express Card at 7.9%.

      • Reward

      credit cards for businesses took a big leap this week, with

      an average interest rate of 11.57%, up from 11.37%. Chase

      issues many business credit cards with reward programs, so

      their quarter-point increase is especially reflected in this

      category. The Advanta Platinum BusinessCard referenced above

      was the lowest rate reward credit card for business at 7.99%.

      • Student

      credit card rates stayed steady, with an average 14.83% APR,

      up from 14.78%. Chase is a major influence on this category

      as well, with one of the larger selections of cards for students.

      The Wachovia Student Visa offered the lowest APR at 9.9%.

      "These

      averages are based on the lowest rates published by the issuing

      credit card banks," says Jusko. "If you don't have excellent

      credit, add 2% to these averages to estimate your rate. Consumers

      or businesses with poor credit may be offered even higher rates."

      Financial institutions represented in the survey include Advanta,

      American Express, Bank of America, Capital One, Chase, Citi,

      Discover, MBNA, National City, Providian, Pulaski Bank, U.S.

      Bank, Wachovia, and Wells Fargo.

       

      Published 10/26/05 (Modified 01/21/13)


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