Rate survey: Credit card rates remain stable

CreditCards.com

Interest rates on new credit card offers held firm for the second straight week, according to the CreditCards.com Weekly Credit Card Rate Report.

The national average annual percentage rate ( APR ) on new card offers stood still at 14.98 percent Wednesday, marking the seventh straight week that interest rates have remained just shy of 15 percent.

None of the cards that CreditCards.com tracks featured rate changes this week. However, one issuer, Barclays , did make changes to its rewards card for football fans, the NFL Extra Points Visa card.

Applicants who successfully apply online for the NFL Visa card will be able to make purchases with it  interest-free for 12 months. However, while dangling the zero-percent carrot, Barclays also threw a stick: It shortened the card's interest-free balance transfer period from 15 months to 12 months.  

With its zero-percent offer, Barclays joins a crowd of card issuers that have made long-term 0 percent offers, but have restricted the terms to a year or less.

Among the 100 cards that CreditCards.com tracks, only 12 cards feature 0 percent balance transfer offers that run longer than a year. By contrast, 24 cards feature interest-free offers on balance transfers for six to 12 months.  

There are significantly more cards in the CreditCards.com database that feature 0 percent promotional offers on purchases. However, the terms on those types of offers also tend to be more restrictive.

For example, among the 50 cards that allow customers to make interest-free purchases for a set period, only nine allow interest-free purchases for longer than a year.

The majority of credit card offers feature some kind of teaser rate
Though less ubiquitous than they were a year ago, zero percent interest promotional rates have remained a common feature among credit card offers, say analysts at the financial services firm Credit Suisse, citing Mintel Comperemedia research.

For example, 79 percent of all credit card offers sent through the mail in July featured a zero percent interest offer on purchases, according to Mintel research. Slightly fewer offers -- 62 percent -- advertised interest-free balance transfer offers. 

Analysts at Credit Suisse say that the percentage of credit card offers that feature some kind of 0 percent teaser rate is down slightly from the previous summer. However, researchers expect that issuers will continue to rely heavily on interest-free offers to net new customers well into the future. "We expect a high level of these offers to continue as long as interest rates remain low," wrote analysts Meredith Roscoe and  Moshe Orenbuch in a research note referring to long-term teaser rates on purchases.

Issuers can afford to extend such cheap credit for long periods of time, in part, because borrowing costs for U.S. banks are at record lows. The Federal Reserve has left the federal funds rate target -- which helps determine how much it costs banks to lend to one another as well as to consumers -- at rock bottom for the past four years.

Policymakers at the Fed don't expect to raise the federal funds rate target until at least late 2014, which means consumers with excellent credit can expect relatively cheap credit for some time.

See related: Libor, the federal funds rate and the US prime rate: A primer

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