Credit card interest rates tick up to 15.01%

Interest rates on new credit card offers inched up this week, according to the Weekly Credit Card Rate Report.

The national average annual percentage rate (APR) rose to 15.01 percent Wednesday after remaining at 15 percent for three weeks. This is the first time rates have increased since November 2013.

This week's change was due to a minor reshuffling of the database. Occasionally, swaps out cards in order to more accurately reflect the current card market.

Several Discover cards the issuer is no longer promoting online were replaced with comparable cards from different issuers. "Currently, all of our online marketing is geared toward the Discover 'It' card," confirmed Discover card spokesman Matthew Towson in an email.

Cardholders who wish to apply for an alternative Discover card, such as the Miles card, can still apply by phone.

Average card balances smaller in 2013
Holiday shoppers racked up slightly more debt in the final quarter of 2013 than they did in the previous quarter, according to research from the consumer reporting company TransUnion.

According to Transunion's Industry Insights Report, average credit card balances rose by approximately $90 in the final quarter of the year -- hitting an average of $5,325 per borrower by the end of December.  

Cardholders may not have borrowed nearly as much as they did the previous holiday season, however. According to TransUnion, average credit card balances fell, year-over-year, by approximately $51 in the final quarter of 2013.

Analysts at TransUnion say cardholders' shrinking credit card balances could indicate a significant number of cardholders still aren't finished paying down the debt they already accumulated. Since the Great Recession, many cardholders have worked steadily to reduce how much they owe.

A separate report, released Feb. 18, indicates a large number of borrowers have finished trimming back on debt and are now stepping up the total amount they borrow. The New York Federal Reserve reported total household borrowing rose in 2013 for the first time since the reession. The increase, which includes debts from mortgages, auto loans, student loans and credit cards, includes a 2.1 percent jump in the final quarter of the year -- the most it's grown from one quarter to the next since 2007.

The New York Fed report also found credit card debt grew by $4 billion in 2013, compared to the fourth quarter of 2012.

Late payments still rare
Despite increasing the total amount they borrow, most households are still managing to pay their bills on time, according to the New York Fed.

Late payments on credit cards are especially rare when compared to previous years. According to TransUnion's report, for example, late payments by 90 days or more ticked up slightly in the fourth quarter of 2013. However, year-over-year, the credit card delinquency rate fell from 1.61 percent of all accounts in the fourth quarter of 2012 to 1.48 percent of all accounts in the fourth quarter of 2013.

TransUnion analysts say delinquency rates will continue to remain near record lows as long as issuers remain stringent about how much credit they're willing to lend to consumers with subprime credit scores. "With relatively fewer subprime credit cards in the marketplace, delinquencies should remain low," said TransUnion's Ezra Becker in a press release.

According to TransUnion, just over 30 percent of all credit card loans belong to consumers with VantageScores below 700. That's down from 44 percent of accounts in 2007.

Issuers may be more welcoming to consumers with lower scores in the near future  as they compete for more accounts, said Becker. That, in turn, could ultimately lead to a substantially higher credit card delinquency rate in the future.

"Competition in the prime score ranges is fierce, and those consumers don't seem to need more card credit," said Becker in the release. "With the economy improving and delinquency rates remaining so low, we may see lenders shifting their acquisition activities to somewhat higher risk markets."

See related: Fed: Card balances leap in December

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