credit cards

2014 credit card rates forecast

Credit card rates will move slightly higher

Rates on variable-rate credit cards likely will drift higher in 2014, McBride says. And, similar to 2013, higher annual percentage rates, or APRs, will push credit scores lower for consumers. The good news is that the increase probably will be more moderate in 2014 than in 2013.

Consumers with good credit can expect credit card issuers to continue to clamor over them by offering low APRs and attractive zero-percent interest periods that could last as long as 18 months, McBride says.

"Issuers will continue to be very competitive for top-quality borrowers," he says. Expect them to remain tepid around consumers with riskier credit.

Credit card rates also won't be affected by any reduction in Federal Reserve asset purchases that have helped to drive down interest rates on mortgages.

“(Credit card) issuers will continue to be very competitive for top-quality borrowers,”

-- Greg McBride,

"There is technically no direct connection between tapering and credit card rates," says Moshe Orenbuch, managing director at Credit Suisse in New York.

Interest rates on credit cards are based on a contractual floating index rate, usually the prime rate, the rate that commercial banks charge their most creditworthy customers. It's tied to the federal funds rate, and the central bank has said that the fed funds rate, a key benchmark for short-term interest rates, will remain near zero until unemployment falls below 6.5 percent or inflation exceeds 2.5 percent.

Lenders typically add a margin to the prime rate, such as 2 percentage points, to determine the annual percentage rate on credit cards.

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Product Rate Change Last week
Balance Transfer Cards 15.80% --0.00 15.80%
Cash Back Cards 16.42% --0.00 16.42%
Low Interest Cards 11.09% --0.00 11.09%
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