Credit News Roundup: Average credit card interest rates up (slightly) from last year
You may have read about a report from TransUnion last month that said both average credit debt and delinquency payments had swelled slightly from the same period last year. In the midst of the biggest shopping season of the year, the average American is carrying close to $5000 in credit card debt. That's up 5% from last year. (Delinquency payments are only slightly on the rise, from 0.71 to 0.75 this year.)
We talked about this earlier this month, and it was interesting to note that many economists agreed that these numbers were actually a good sign since they pointed to improved consumer confidence. However, given that both delinquencies and debt were up, it's no surprise that LowCards.com announced this week that interest rates were up slightly from the same week last year, too.
The average interest rate on credit cards is 14.31%; that's a tick higher than last week (14.30%) and up 0.15% from the same week last year. So, yes, average interest rates are on the rise, but it should be noted that this number is actually down from six months ago when it was 14.36%.
The conclusion? Higher delinquencies and debt will drive the average interest rate up. We knew this already. However, for a steep uptick in interest rate, these numbers will have to spike tremendously and, believe it or not, credit card interest is way down from the 1990's and '80's, especially. Just check out this graph from NerdWallet.
Some more headlines from the week in credit card news...
- Remember the other day when we mentioned that gift cards had reached a new level of popularity (and usability) this holiday season? Well, the federal government seems to agree with us and a bill has been introduced into the U.S. Senate that would eliminate expiration dates on gift cards. That's right, The Gift Card Consumer Protection Act is a real thing meant to eliminate expiration dates and pesky fees. There are many other provisions to the bill but, by and large, this looks like a positive for consumers that give and receive gift cards.
- New Jersey Gov. Chris Christie issued an executive order in November that allows insurance companies to issue payments on claims through prepaid debit cards. This order came in reaction to Hurricane Sandy and is a first for the Department of Banking and Insurance, which up to this point had not allowed insurers to issue such credit cards for payments. We'll see if this becomes a permanent practice moving forward.
- Finally, a slew of new airline miles credit cards that you might recognize returned to the market in the past month. Check out our takes on upgraded versions of the Southwest Airlines Rapid Rewards Premier® Credit Card and our recommended airline miles credit card for the month of December, the new-and-improved Chase United MileagePlus® Explorer Card.
For more credit card news visit the Creditnet newsroom. Hope your Tuesday is treating you well!