Credit Card Rates Climb Again, Latest Industry Shakeup Adds to Uncertainty
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Credit
Card Rates Climb Again, Latest Industry Shakeup Adds to Uncertainty
Credit
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.
"In
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.
Also:
?
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.
?These
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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