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Weekly Credit Card Interest Rate Report: December 20, 2012

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Average credit card interest rates stayed the same for the fourth week in a row, this week’s Credit Card Select report found.

The national average has remained at 15.5 percent since mid-November, and as the end of the year approaches, stability in the credit card market is welcomed by consumers and financial experts alike.

But end-of-year balance could end as the New Year approaches, and with it, a major question mark hanging in the balance.

The Bad News: Credit Cards and the Fiscal Cliff

Credit Card Select Weekly Rate Report
Average APR
National Average 15.53%
Low Interest 11.07%
Balance Transfer 14.00%
Rewards 15.56%
Student 17.59%
Business 14.75%
Bad Credit 20.20%
Source: CreditCardSelect.com (Updated December 20, 2012)

Lenders and banks who’ve recently loosened their lending requirements would most likely resort back to recession-level standards, where credit card requirements were tighter, approval rates were lower and credit lines decreased.Now just weeks away from reaching the fiscal cliff, politicians continue negotiations to find a bipartisan financial solution. Should they fail to reach an agreement, consumers may see the credit card market affected substantially.

Credit rating firms, such as Moody’s, recently revealed that going over the fiscal cliff could also result in a lower credit rating for the country. Though the concept is somewhat abstract, a country’s credit rating affects interest rates of various financial products, while also managing the amount of risk investors make when investing in a country’s market.

Going over the fiscal cliff would also spark new recession fears, and economists predict consumers would feel it from different angles. Not only would they have tighter credit accounts to work with, but disposable income could be less because of increased taxes, making credit lines a more critical mode of financial help when needed.

The Good News: More Transparency

Last week, the Consumer Financial Protection Bureau revealed a report that provided insight into how the major credit bureaus manage consumer credit files. The report found that:

  • Credit cards make up the most credit lines on consumers’ credit reports
  • Less than 20 percent of consumers check their credit reports every year
  • Evidence for credit disputes often don’t make it to the original creditor

For the first time, credit bureaus provided insight into how they manage credit information, and consumers can use this to make the most of their personal credit.

According to Brian Decker, CreditSwarm.com cofounder and CEO, consumers can get back to the basics to make sure credit cards are working for – and not against – them.

“Pay your bills on time, set up auto-payments if possible,” Decker said. “Keep all records, and backup paper records online.”

With credit cards making up so much of a credit report, Decker believes the key to credit success is attention to detail and accuracy.

“The problem for consumers is that their credit report line items list the data furnisher, that is, the debt collector, not the original creditor,” Decker said. “Also, account dates, balances, and payment histories may have changed or be incomplete during the course of transferring the credit card debt from one debt collector to another. This makes it nearly impossible for consumers to verify the accuracy of the information being reported.”

Even if you’ve properly managed your credit, there’s plenty of room for accidental inaccuracies. But mistakes can be prevented, or at least caught, by routinely checking your credit report.

“Consumers are entitled to a free annual report from Experian, Equifax and Transunion,” said Decker.  “Stagger them so that you get one free credit report every four months.”

Tools, like credit monitoring, are also available to consumers seeking more oversight with their personal credit profiles.

“Consumers can better manage credit card reporting by having a credit monitoring service,” said Adam Tijerina, a personal finance expert for DebtConsolidationUSA. “Monitoring notifies them of important changes to their credit reports. One alert is for new credit inquiries, which can lower credit scores.”

Creating Your Credit Resolution

Whether you need to check your credit report more often, or just have difficult managing multiple credit card payments, now is the perfect time to brainstorm your credit resolutions for 2013. And unlike most half-baked resolutions, setting financial goals and milestones is realistic, and can be done from the comfort of home.

With the fiscal cliff on the horizon, consumers must deal with another two weeks of economic uncertainty, but the steps you take now could put you in a great position to improve your credit in 2013 no matter what the political outcome.



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