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Credit Card Rates Rise Slightly, More Increases On the Way

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

Rise Slightly, More Increases On the Way

Credit card

rates rose only slightly this week, but Tuesday's announced

increase in federal lending rates signaled more hikes to come.

"Just

as the previous Fed ncrease had finished making its impact on

credit card rates, another quarter-point increase comes along

and promises to raise rates again," said Justin McHenry, Research

Director for IndexCreditCards.com. "Contrary to speculation

last week after the nomination of Ben Bernanke as Federal Reserve

chairman, it now appears we'll see more hikes in the next few

months."

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

move up, as they are doing now, credit card rates follow.

This week's average credit card rates:

    • "Top-level"

    consumer credit cards averaged a 9.74% Annual Percentage Rate

    (APR), up slightly from 9.72%. The lowest rate found for consumer

    credit cards with no annual fee was the Capital One "Prestige"

    Platinum MasterCard, offering a 5.9% APR. This week Capital

    One split their Platinum MasterCard into two different offerings,

    a 5.9% "Prestige" card and an "Above Average Credit" card,

    offering an 8.9% APR.

    • Top-level

    business credit cards remained at an average 9.91% APR for

    the third straight week. Both the Advanta Platinum BusinessCard

    and the Chase Platinum Business Card offer a 7.99% APR.

    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:

      • Consumer

      reward cards rose to an average 10.89% APR, up from 10.85%

      last week. MBNA offers a number of cards in this category

      with a published rate of 7.9%, e.g., the Elite Rewards MasterCard.

      • Business

      reward credit card averages rose again this week, with an

      average interest rate of 11.64%, up from 11.57%. The Advanta

      Platinum BusinessCard referenced above was the lowest rate

      business reward credit card at 7.99%.

      • Student

      credit card rates increased slightly, with an average 14.85%

      APR, up from 14.83%. The Wachovia Student Visa and the Sovereign

      Bank Student Card both offer eligible students a 9.9% rate.

      "As

      always, our averages are based on the lowest rates published

      by the issuing credit card banks," said McHenry. "If you don't

      have excellent credit, add 2% to these averages to estimate

      your rate. Those with poor credit will 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 11/02/05 (Modified 01/20/13)


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