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Credit card interest rates remain at 14.95 percent

Kelly Dilworth

Average rates on new credit card offers remained unchanged this week, according to the CreditCards.com Weekly Credit Card Rate Report.

The national average annual percentage rate (APR) stayed put at 14.95 percent Wednesday, after dipping by one basis point the previous week.

None of the cards tracked by CreditCards.com featured rate changes this week. Most credit card issuers also left promotional balance transfer offers and short-term APRs alone as well.

One issuer, Barclays, fine-tuned an offer on a rewards credit card for frequent fliers. Barclays introduced a 0 percent APR offer to the U.S. Airways Premier World MasterCard. Applicants who qualify for the U.S. Airways card will now be able to make interest-free purchases for up to 12 months.

The issuer also shortened the card's 0 percent balance transfer period from 15 months to 12 months. Barclays left the card's $89 annual fee alone.

Credit card use falls again
Issuers have slowly increased the number of changes they made to  card offers in recent months as they try to lure new customers and encourage current cardholders to spend. However, many credit card holders are still reluctant to pull out their plastic.

As the economy gradually gains steam, consumers are taking out larger numbers of loans and slowly increasing household debt, research shows. But many are leaving their credit cards at home or are only charging what they can afford to quickly repay.

Consumer borrowing, excluding mortgages, for example, rose by nearly 6 percent in June, according to a report released Aug. 7 by the Federal Reserve. However, revolving credit -- which is mostly made up of credit card debt -- fell by 3.8 percent.

The Federal Reserve's latest report on household debt and credit shows that consumers are feeling confident enough about the economy to borrow money for a new car or pay for higher education. But many still aren't ready to charge smaller items to their high-interest cards.  

According to a second report, released Aug. 13 by TransUnion, the average borrower is carrying about the same amount of credit card debt as he or she did during this time last year.

The average amount of card debt per borrower, for example, fell, year-over-year, to $4,965 in the second quarter of 2013 -- down from $4,971 in 2012. 

Consumers are also continuing to pay their bills on time at record rates. Late payments by 90 days or more fell to the lowest levels in almost 19 years, according to TransUnion.

"Consumers continue to value their credit card relationships as a primary means of liquidity. This is best demonstrated by the historically low credit card delinquency rates we see today," said TransUnion's Ezra Becker in a statement accompanying the report .

Consumers weary of looming rate hikes
A number of consumers told researchers that they think the Federal Reserve is going to raise rates this year after leaving them alone for nearly five years, according to the survey.

The Federal Reserve has left the federal funds rate target -- which helps set other rates, including credit cards -- near zero since December 2008. As a result, loans on new homes and cars have been much more affordable over the past several years.

Now that the economy is growing at a faster pace, the Federal Reserve could decide to raise interest rates sooner than it forecast.

According to the report, 68 percent of consumers told researchers that they thought interest rates would rise sometime in the next year -- up from 33 percent in July 2012.

As a result, a larger number of consumers -- particularly those with higher incomes -- said that they would likely rush their borrowing this year in order to take advantage of today's record low rates. "Among households with incomes of $75,000 or more, more than one-in-four cited the advantage of buying homes before prices or interest rates increased in July," wrote researchers in the report .

See related: Feds ease up on credit limits