Average Credit Card Rates Likely to Stay Near 15% in 2013

Average Credit Card Rates Likely to Stay Near 15% in 2013The national average credit card rate on new offers remained just under 15 percent for the ninth consecutive week, and that may not change much for the rest of 2013, according to analysts.
The most pessimistic outlook puts the average credit card rate just above 15 percent.
One of the biggest factors that determines credit card rates is the prime rate, which is tied to the benchmark federal funds rate. The Federal Reserve has kept the funds rate at near zero since the financial crisis of 2008.
Fed officials project that the rate will stay at 0-.25 percent until mid-2015, but there is absolutely no hard assurance on that outlook.
But in their last meeting in December, Fed policy makers shied away from a timetable. Instead, the Fed said rates will stay there as long as the unemployment rate remains above 6.5 percent (currently at 7.8 percent) and projected inflation at 2.5 percent or below.
Fed officials are demonstrating more caution than usual in wording their posture on interest rates to prepare the public for economic changes that may be coming before mid-2015, including changes that would force policy makers to increase the benchmark rate.
However, there are other factors that determine credit card rates for individual Americans, including a consumer’s credit history.
“Pay all your bills on time. Don’t apply for lots of new credit. Use cash advances rarely. And keep outstanding balances to credit line low,” Robert Hammer, owner and CEO of R.K. Hammer, a bankcard advisory firm, told foxbusiness.com. “I wish it was more complicated than that, but it isn’t.”
The annual percentage rate for variable-rate credit cards, the most popular type, averaged 14.52 percent in 2012. The average APR for fixed-rate cards in 2012 was 13.84 percent.
None of the cards that CreditCards.com tracks had rate changes this past week, keeping the average rate on new offers at 14.96 percent for the ninth consecutive week. However, one issuer changed a promotional offer that it uses to lure new customers.
Pentagon Federal Credit Union canceled its unconventional offer on the PenFed Platinum Cash Rewards card and replaced it with a more traditional 0 percent balance transfer offer that lasts for 18 months.
Previously, new applicants were offered a low 4.99 percent interest rate on balance transfers for the full life of the balance. The lengthy promotional rate – first introduced in April 2012 – was unique because it was the only introductory offer that did not have a time limit, according to CreditCards.com.

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