U.S. Average APR on the Rise

This week’s Annual Percentage Rate (APR) average for the entire U.S. rose to 12.28 percent based on computations by credit experts and independent survey firms. Last week, 95 of the top credit cards posted a 12.14 percent APR average. This week’s APR is significantly lower than the 12.84 figure six months ago.

The APR is computed using the figures provided by dozens of major card companies in the U.S. Survey firms then take these figures and find for the average APR for the difference credit card categories. These then become the basis for some of the policies and changes employed by credit card companies.

The latest data points to four categories seeing their APR increase, two posting lower averages, and three card categories remaining unchanged. Experts say that the latest APR hike was the result of certain card companies raising interest rates on particular card products. Analysts say that the increase in the interest rate has had a significant impact on the average APR.

Card experts say that the decision to increase rates can be seen as the card industry’s continuous reaction and adjustment to the changing economic environment. The nearing implementation of tougher credit regulations are also forcing card firms to change their policies and rates on a more regular basis, leading to fluctuations in the weekly APR average.

The federal government also released its latest report into economic activity in the credit industry. Regulating agencies say that consumer spending has remained relatively soft in July and August. This, combined with stricter lending standards, has helped keep credit card balances down. As a result, delinquencies and charge-offs are at their lowest level in recent months. Nevertheless, federal regulators and economists warn that the credit industry can still lose billions of dollars if the unemployment rate continues to rise.

Average balance transfer fees have increased to 10.32 percent, up from 10.14 percent the week before. Six months ago, the rate was significantly higher at 11.18 percent. Analysts say that the lower rates are the result of card companies attempting to draw more clients away from their competitors.

Low-interest credit cards also saw their APRs rise by almost a whole percentage point to 11.52 percent, up from 10.62 percent just a week before. Even with the relatively high jump, the figure is considerably lower than figures half a year ago, which stood at 12.38 percent.

Reward, bad credit, and student credit card APRs have also remained unchanged since last week at 12.16, 14.29, and 14.45 percent respectively.