Average Retail Credit Card’s Interest Rate Surges to 26% Despite Fed Cuts
While the Fed recently cut interest rates again in a bid to boost U.S. economic activity by lowering borrowing costs, that easy money mindset is not being shared by issuers of retail credit cards. The average store card’s APR is now 26.01%, up 0.37 percentage points from a year ago and almost five whole percentage points higher than the average overall APR on credit cards of 21.1%, according to a report.
Nearly Half of Americans Have Let Their Airline or Hotel Rewards Expire
According to a recent Bankrate Credit Cards survey, 46% of U.S. adults participating in airline and hotel rewards programs have, at some point, let their points or miles expire. Among those who collect credit card rewards, 29% allowed their rewards to expire intentionally. Perhaps the number of individuals not participating in rewards redemption can be traced back to an overall lack of awareness concerning the worth of their loyalty program’s rewards: 53% of U.S. adults admit they have no idea how much 10,000 points or miles are worth.
Credit Card Delinquencies in U.S. on Rise for Smaller Issuers
The spread between the prime rate and the average annualized rate on credit cards widened to a record at the end of August. Many issuers have been competing for new customers with richer rewards rather than lower rates. They may also be maintaining this record spread because risks are brewing, underscored by a pickup in delinquency rates at smaller issuers of cards. Fed data show a growing gap between delinquency rates for the 100 largest banks compared with all others. Delinquent accounts for the largest banks were at 2.44% in the second quarter, while other banks saw the rate spike to 6.34% from 5.73% the prior quarter…Read more>>