Even though gas prices are falling and consumer optimism is rising the Fed held the line on short-term interest rates this week. Regardless, credit card interest rates continue to climb with punitive rates among the top issuers hovering at an unprecedented 32.24% this month. The rising rate climate has also largely driven fixed interest rate credit cards from the market with the exception of short-term promotional rates. According to CardTrak (www.cardtrak.com), the average fixed interest rate is now 14.55% versus an average variable interest rate of 16.34%. Since the Fed started tightening rates in July 2004, the average variable credit card interest rate has soared 476 basis points. More than 86% of credit card accounts now carry variable interest rate structures. Most of the top issuers charge at least nine points over the prime rate for standard accounts which means a return to 17%-18% APRs.
| CREDIT CARD INTEREST RATES |
|---|
| Month | Prime | Fixed | Variable |
| Aug 04 | 4.50% | 12.85% | 11.89% |
| Sep 04 | 4.75% | 12.88% | 12.11% |
| Oct 04 | 4.75% | 13.00% | 12.19% |
| Nov 04 | 5.00% | 13.04% | 12.37% |
| Dec 04 | 5.25% | 13.09% | 12.49% |
| Jan 05 | 5.25% | 13.22% | 12.67% |
| Feb 05 | 5.50% | 13.25% | 12.84% |
| Mar 05 | 5.75% | 13.32% | 13.08% |
| Apr 05 | 5.75% | 13.39% | 13.17% |
| May 05 | 6.00% | 13.48% | 13.45% |
| Jun 05 | 6.00% | 13.59% | 13.61% |
| Jul 05 | 6.25% | 13.64% | 13.84% |
| Aug 05 | 6.50% | 13.76% | 14.24% |
| Sep 05 | 6.75% | 13.80% | 14.49% |
| Oct 05 | 6.75% | 13.87% | 14.64% |
| Nov 05 | 7.00% | 13.91% | 14.89% |
| Dec 05 | 7.25% | 13.93% | 15.20% |
| Jan 06 | 7.50% | 14.08% | 15.53% |
| Feb 06 | 7.50% | 14.11% | 15.75% |
| Mar 06 | 7.75% | 14.15% | 15.81% |
| Apr 06 | 7.75% | 14.19% | 15.99% |
| May 06 | 8.00% | 14.23% | 16.02% |
| Jun 06 | 8.00% | 14.32% | 16.10% |
| Jul 06 | 8.25% | 14.42% | 16.27% |
| Aug 06 | 8.25% | 14.55% | 16.34% |
| Source: CardTrak (www.cardtrak.com) |
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