Average rates on new credit card offers rose this week for the first time in more than two months, according to the CreditCards.com Weekly Credit Card Rate Report.
The national average annual percentage rate (APR) climbed to 14.99 percent Wednesday, after hovering between 14.95 percent and 14.96 percent for 13 weeks. This is the first time since 2012 that the national average has risen above 14.98 percent.
Unlike previous rate changes, however, this week's change was spurred by a reshuffling of cards in the CreditCards.com database, rather than by a new APR on an existing card. Occasionally, CreditCards.com swaps out cards that have been discontinued or taken offline by issuers and replaces them with similar offers.
This week, CreditCards.com removed three cards that were no longer being promoted online: the Citi Gold Aadvantage Visa Signature card, the BankAmericard Power Rewards Visa Signature card and the Best Buy Rewardzone Platinum MasterCard.
CreditCards.com replaced these cards with the new BankAmericard Better Balance Rewards card, which Bank of America introduced earlier this year, the Citi Gold Aadvantage World MasterCard and the Gap Visa card.
Credit offers abound
Over the past several months, credit card issuers have substantially increased the amount they spend on marketing cards to new customers. The number of credit card offers mailed to consumers' homes, for example, has more than doubled since the summer of 2012, according to research from Mintel Comperemedia, which tracks credit card mailings.
Issuers have also spent significantly more resources on adjusting offers and testing new promotions, according to CreditCards.com data -- including adding extra-long 0 percent balance transfer offers and purchase APRs to cards that previously featured much more limited promotions. (American Express, for example, recently added a 15-month, 0 percent balance transfer offer to three of its flagship cards and extended the amount of time cardholders can make interest-free purchases from 12 months to 15 months.)
Until recently, card issuers' aggressive marketing efforts appeared to have little impact on cardholders' willingness to spend. Revolving debt, which is nearly entirely made up of credit card debt, for example, fell by nearly 4 percent in June, according to Federal Reserve data, as more cardholders shied away from using the credit they already had.
Cardholders' reluctance toward using credit may be wearing off, as research released Aug. 30 by Equifax shows that cardholders' appetite for new credit has increased substantially in the past year
From January 2013 to May 2013, card issuers approved nearly $78 billion in new credit, according to the Equifax National Consumer Credit Trends Report -- up more than 6 percent since the same time last year. The same report noted it was the first time in more than five years that Equifax reported overall card balances had increased, year over year.
Card issuers also handed out 1 million more loans this year than they did in the first five months of 2012 -- a sign that issuers may also be loosening their standards for approving new applicants.
According to Equifax, issuers haven't approved this much new credit since 2008, when the credit crisis forced banks to substantially cut back on the amount of loans they could hand out to new and current cardholders.
Consumer spending slows again
Cardholders' balances are unlikely to increase by too much, however. Despite showing a renewed interest in new credit, cardholders are still exceptionally careful about the amount they are charging on their cards.
Consumer spending rose by just 0.1 percent in July, according to research released Aug. 30 by the Commerce Department, after climbing by 0.6 percent in June.
July's tepid growth in consumer spending surprised economists, who predicted that consumers would spend much more that month -- particularly since consumer spending beat expectation in June. Among 74 economists polled by Bloomberg News, at least half predicted that consumer spending would rise by 0.3 percent or more.
Consumers also had less to spend than originally forecast. According to the Commerce Department, incomes rose by just 0.1 percent in July, which is just slightly less than economists predicted. According to Bloomberg News, experts predicted incomes would rise by at least 0.2 percent.
July's slowdown in consumer spending may have just been temporary dip, however.
A separate report, released Sept. 3 by Gallup, showed that consumers' self-reported discretionary spending rose significantly in August, reaching its highest level in five years.
According to Gallup, consumers spent an average of $95 per day on nonessentials -- up $6 from the previous month. "August's stronger numbers come after a three-month period in which Gallup's spending measure was generally flat," wrote Gallup's Jeffrey M. Jones in a news release announcing the data.
August's pickup in spending may have been due, in part, to back-to-school shopping, said Jones. However, "both parents and non-parents reported higher August spending, suggesting the spending boost was a result of other factors."
Gallup's spending survey is particularly poignant since it tracks how much consumers spent on personal items, entertainment and other nonessentials. It doesn't include spending on household items, debt and other mandatory purchases.
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