Average Credit Card Interest Rates Go Down

Great news for credit card holders: according to a new financial survey, at the present time the average credit card interest rates are at a two-year low. It became possible owing to the Federal rate decreases. It dropped from 5.25% in September to 3% last week. Now the average non-reward credit card interest rate is 13.29%. That is the lowest rate since February 2006. The interest rate cut will help millions of credit card holders benefit from new credit card offers and save on interest bills.

Interest rates often matter the most when you decide what credit card to apply for. The less APR you pay, the more beneficial the credit card is. The survey shows that the interest rates on consumer, student and business credit cards have decreased, so the cost of borrowing has become lower.

The average APR on non-reward consumer credit cards dropped to 13.29%. Rewards plastics come with higher interest rates: the average APR on reward credit cards is 15.15%. It is the lowest rate since April 2006.

Student credit card rates are typically higher than the APR on consumer cards. The reasons are obvious: students have a lack of financial experience and sufficient skills to manage their credit wisely. The average student credit card rate stands now at 15.22%.

Business credit card rates are also at a two-year low. The average interest rate on non-reward business credit cards is 11.29%, while the average rate on reward business plastics stands at 12.60%.

People who have variable credit rates will also benefit from the Federal rate decreases because it moves in tandem with the Prime rate. When the Fed rate decreases, the Prime rate goes down as well. Since the variable APR fluctuates based on the Prime rate, you will pay less interest.

The credit companies will turn the drop of interest rates to their advantage too. The banks are afraid that a housing recession will lead to a consumer-spending recession. The sub-prime mortgage crisis caused the credit companies to reduce lending money to consumers and businesses. That has left even the most creditworthy consumers without financing to make large purchases. The customers do not spend as much as they used to. More access to credit cards at lower rates will mean more new clients and more profits for banks.

When all interest rates go down, it is worth examining your credit card statement to check what interest rates you are paying. Browse web sites to compare the fees and APRs of different credit companies with your plastic. If you find out that you have paid too much, it is time to take actions. You can apply for a better credit card or negotiate lower interest rates with your credit card issuer. If you can pay less, why not use this opportunity? Lowering your APR lets you cut down your credit bills and therefore save money.