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Credit Card Rates Climb Again, Latest Industry Shakeup Adds to Uncertainty

by Peter Andrew


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Card Rates Climb Again, Latest Industry Shakeup Adds to Uncertainty


card rates rose for the fifth straight week. In addition, the

latest step forward in the Bank of America/MBNA merger, coupled

with Wachovia?s announced plans to begin issuing its own credit

cards, promised to keep industry averages unsteady.


a few months, the credit card landscape will look significantly

different than it did just a year earlier,? says Justin McHenry,

Research Director of IndexCreditCards.com. ?Bank of America

will likely have swallowed MBNA, Chase has already acquired

Bank One. That?s major consolidation among the largest credit

card issuers. At the same time, Wachovia has the potential to

become a major player if it so chooses. The danger of too much

consolidation could be balanced with the emergence of a large

new issuer -- it?s hard to know at this point what it will mean

for consumers.?

This week MBNA shareholders voted to approve a merger with Bank

of America. For a number of years, MBNA has been the issuing

bank for Wachovia-branded credit cards, meaning Wachovia credit

card customers are actually served by MBNA. In a related announcement

on the same day as the MBNA merger vote, Wachovia and MBNA agreed

to end their partnership next year, and Wachovia will begin

issuing its own credit cards in January of 2006. Current cardholders

of Wachovia-branded credit cards will become MBNA customers

unless they switch to the new cards issued by Wachovia.

This week?s credit card averages:


?Top-level? consumer credit cards averaged a 9.76% Annual Percentage

Rate (APR), up from 9.74% last week and up a full quarter-point

in the last month. The Capital One ?Prestige? Platinum MasterCard

offered the lowest published rate at 5.9%.


The top-level business credit card average rose to 9.95%, from

9.91% previously. 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.



Consumer reward cards rose to an average 10.92% APR, up from

10.89% last week. MBNA offers a number of cards in this category

with a published rate of 7.9%.


Business reward credit cards rose to an average 11.67% APR,

up from 11.64% last week and 11.31% a month earlier. The significant

jump in business reward cards versus standard business credit

cards can be attributed to the fact that standard cards are

more likely to offer fixed rates, while reward card rates are

likely to be variable. The Advanta Platinum BusinessCard referenced

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


Student credit card rates increased again, to an average 14.91%

APR, up from 14.85%. The Wachovia Student Visa and the Sovereign

Bank Student Card (both issued by MBNA) offer eligible students

a 9.9% rate.


averages are based on the lowest rates published by the card

issuers,? said McHenry. ?If you don?t have excellent credit,

add 2% 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, Wells Fargo and more.


Published 11/09/05 (Modified 01/21/13)

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