What is a good credit card rate
By Kelly Dilworth
Updated: June 5, 2013
Interest rates on new credit card offers slipped this week, according to the CreditCards.com Weekly Credit Card Rate Report.
The national average annual percentage rate (APR) fell to 14.95 percent Wednesday after Chase dropped its test offer on the Chase Freedom card.
Previously, consumers who applied for the Chase Freedom card were offered either a range of possible APRs or a flat APR of 16.99 percent.
Now, applicants will see just a range, starting at 13.99 percent and topping out at 22.99 percent. Chase did not respond to a request for comment on the cash-back card's recent changes.
The sporting goods store Cabela's also made a minor APR change this week. The international retailer revised the maximum APR on the Cabela's Club Visa card from 18.19 percent to 18.18 percent.
Unlike most U.S. credit cards, which are tied to the U.S. prime rate. the Cabela's Club Visa is indexed to the one-month Libor rate. which fell.
The international credit card issuer Barclays was also busy this week. Barclays introduced a year-long introductory APR to the Carnival World MasterCard, which previously featured just a short-term balance transfer offer. The issuer shortened the card's balance transfer offer from 15 months to 12 months as well.
Credit card issuers have been markedly more active this summer, according to CreditCards.com data. For example, average credit card interest rates have fluctuated more often in the past seven weeks than they have in months, thanks in part to issuers testing new offers.
The total number of credit card offers mailed to consumers' homes has also picked up, according to the market research firm Mintel Comperemedia.
Despite stronger interest from issuers in courting new applicants, however, consumers still aren't spending as much as issuers would like.
Consumer spending drops
Consumer spending dipped in April for the first time since May 2012, according to figures released Friday by the Commerce Department. The drop in spending was slight -- a mere 0.2 percent. But to economists, a drop in spending after months of small gains is a bad sign that consumers are holding back just when the economy was picking up steam.
Consumer spending had grown by nearly a full percentage point in February and then increased again, just slightly, in March.
This year's back-to-back increases in consumer spending, coupled with numerous reports showing robust consumer confidence in April and May, had prompted many economists to marvel at consumers' resilience in the face of so much economic uncertainty.
For example, despite significantly more jobs being added to the economy since January, consumers have weathered a number of financial and emotional setbacks this year, including slightly higher payroll taxes and sharply reduced government spending due to legislative gridlock.
For the first three
months of the year, consumers defied economists' predictions that they would significantly decrease their spending in order to cope. That, along with consumers' buoyant moods for much of the year, prompted many economists to say that the underlying economy must be gathering strength.
April's spring swoon, however, shows that the economic recovery still has significant soft spots.
Consumers optimistic, but weary
Despite a decreased penchant to spend during the spring, consumers are still feeling pretty good about the economy's prospects, according to numerous reports. They may even be more open to spending in the future.
For example, according to the Thomson-Reuters/University of Michigan consumer sentiment index, released Friday, consumer sentiment soared to its highest level in five years, prompting some experts to say that the Fed's aggressive approach to monetary policy -- including leaving interest rates at rock bottom -- is working.
"The surge in consumer confidence is exactly the type of economic jump-start the Federal Reserve intended to result from its aggressive policies," said University of Michigan economist Richard Curtin in a news release accompanying the report.
Households are feeling better about the economy than they have since well before the financial crisis began, according to the survey -- and a significantly larger number say they plan to buy homes and other durable goods in the near future.
Not everyone's feeling better about their own finances, however.
A report released Wednesday by Discover showed that consumers' attitudes toward their personal financial prospects soured in May, even though many consumers said they thought the economy was getting better.
The number of consumers who said their personal financial situation is either "good" or "excellent" fell in May, according to Discover's U.S. Spending Monitor. So too did the number of consumers who said their financial outlook is brightening.
Published: June 5, 2013
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