The national average annual percentage rate (APR) on new card offers climbed to 14.97 percent Wednesday -- the highest it's been since March. This is just the fourth time this year that average interest rates have spiked. Changes by Chase and Capital One spurred the jump in rates. Chase raised the APR on two of its business credit cards -- the Chase Business Ink card and the Chase Ink Cash card. Both cards previously featured a flat APR of 10.24 percent. Applicants are now offered a 13.24 percent interest rate, which is a full 3 percentage points higher.
To get a sense of just how big a difference that higher rate can make to a business's bottom line, consider this. A new business cardholder who borrows $7,000 on a Chase Business Ink card and pays $200 monthly at 13.24 percent interest will have to pay $1,896 in interest to clear the balance. That's $545 more than the cardholder would have paid a week earlier, when the offered rate was just 10.24 percent. (Calculator: How long will it take to pay off your credit card balance?)
Chase also trimmed its promotional offer on both credit cards by cutting in half the amount of time that businesses can enjoy a 0 percent APR on purchases and balance transfers. New cardholders now have six months rather than 12 to take advantage of interest-free purchases and balance transfers.
Despite the shorter promotions, however, Chase is still one of the only issuers to offer interest-free balance transfers on business cards, according to CreditCards.com data. Among the cards that CreditCards.com tracks, just three issuers offer business cards featuring a zero percent balance transfer offer. None of those issuers offers a balance transfer promotion on a business card for longer than six months.
Chase spokesman Steve O'Halloran says that business card applicants still have a variety of cards to choose from. "Chase offers a number of small business cards with different rates and benefits, which is why we encourage customers to choose the card that is best for them," said O'Halloran in an email.
Capital One also helped push the national average up this week by boosting the minimum APR on its Cash Rewards card for consumers with average credit. Previously, the card featured a range of APRs from 17.9 percent to 22.9 percent. Now, the card features just one flat rate of 19.8 percent. "Details of our pricing strategy are proprietary, but we adjust rates periodically based on the competitive landscape and market conditions," commented Capital One spokeswoman Sukhi Sahni.
This week's national average was also affected by a slight reshuffling of the CreditCards.com database. The Wells Fargo College Card is no longer available online, confirmed Wells Fargo spokeswoman Natalie Brown. So CreditCards.com replaced it in the database with the bank's lower rate Cash Back College Card. The Wells Fargo Cash Back College card features an APR range of 11.15 percent to 21.99 percent. However, because CreditCards.com only considers a card's lowest possible rate when calculating average interest rates, the card's higher maximum APR did not affect the national average.
Source:
CreditCards.com
