The interest rates on credit cards have remained steady despite the downgrade of the country’s own credit rating according to the weekly interest report.
None of the cards which are included in the weekly survey changed their rates last week with the average annual percentage rate on new credit card offers remaining at 14.88 percent.
The average annual rate has recently seen an 8 week period of fluctuation which saw the rate rise to an all time high of 14.91 percent. However, the return to a steady rate even in the face of the recent downgrade may well indicate a return to the stability of the market that was seen throughout the early part of 2011. This is the fourth time this year that the average rate has remained steady for two or more consecutive weeks.
In previous years, the rate was much more volatile over the course of the year, due in large part to the concerns surrounding the introduction of the Credit CARD Act 2009. However, now that the law is firmly established and financial concerns are disappearing, APRs have become much more stable.
Creditors do not appear to have been shaken by the downgrade of the nation’s credit rating and credit card offers remain steady following the announcement that the U.S. Credit rating would be downgraded from AAA to AA+. There is no indication from the nation’s banks that there will be any significant changes to interest rates in as a result of the downgrade. Gail Hurdis, a spokeswoman for Chase said,
The downgrade has no impact on customers at this time.
However, despite these reassurances, many experts are predicting higher interest rates in the near future. Cristian DeRitis, director at Moody’s Analytics said,
The spending cuts agreed upon with the debt ceiling deal will also have a direct, negative impact on GDP growth in the short term. APRs could rise as a result of these factors as credit card issuers’ lending costs increase and as the risk of further economic weakness increases borrowers’ credit risk.
However, the Federal Reserve rate setting committee announced last week that they have no intention of changing the federal funds rate until mid 2013. Since this means that the prime rate will remain stable for almost 2 years, most variable rate credit cards will also remain stable.