Understanding credit card trends is crucial for consumers to make informed financial decisions and navigate the evolving market. Finance and research firm WalletHub recently published its Credit Card Landscape Report for 2024, which comprehensively analyzes the latest shifts in the credit card landscape, helping consumers stay ahead of the curve. They conducted a thorough analysis of over 1,500 credit cards, drawing data directly from issuer websites, consumer complaints, and financial trends to identify key changes over time.
We’ve referred to WalletHub’s study to highlight the key trends shaping the credit card industry in 2024. Here are the findings from their report.
Interest Rates
A closer look reveals that interest rates have climbed across all credit score categories. For individuals with excellent credit, the average rate has risen from 17.52% to 18.32%. Those with good credit face an average rate of 24.43%, up from 23.47% in the previous year. The situation is more pronounced for those with fair credit, whose average rate has jumped from 25.77% to 26.89%. Even secured credit cards, typically aimed at those with limited credit history, have increased from 22.34% to 22.95%.
Interest Rate Landscape for All New Offers
The interest rate landscape for new credit card offers has steadily increased. The average interest rate for all current offers stands at 23.10% as of Q2 2024, an increase of 3.17% as compared to Q2 2023. This upward trend indicates a more expensive borrowing environment for consumers seeking new credit cards.
Interest Rate Landscape by Credit Standing
WalletHub’s report reveals that interest rates vary significantly based on a consumer’s credit standing. Individuals with excellent credit scores receive the lowest average interest rates at around 18.20%, while those with fair credit see much higher rates, averaging 26.85%. However, the study also shows that interest rates in Q2 2024 have increased across all credit standings compared to Q2 2023. This reflects the overall trend of rising borrowing costs. Even secured credit cards experienced a rate increase(22.87 vs 22.34)
Assessed Interest Rate of Accounts with Finance Charges
The average interest rate assessed on accounts incurring finance charges has climbed to 22.76% in Q2 2024, an increase from 22.16% in the same quarter of the previous year. This upward trajectory signifies a growing expense for consumers who carry balances on their credit cards. Rising interest rates, driven by the Federal Reserve’s monetary policy and broader economic factors, have contributed to higher credit card interest charges for consumers.
Balance Transfer Landscape
The balance transfer landscape in Q2 2024 shows a tightening of consumer options. The average balance transfer fee for cards with 0% Intro APR has risen to 3.12%, up from 2.88% in Q2 2023. Despite this increase in fees, the 0% APR Intro Period has remained relatively stable, offering a duration of 6 to 21 months. This suggests that while transferring balances can still be advantageous, consumers may face higher upfront costs compared to the previous year.
New Purchase Landscape
The average length of the 0% intro period for new purchases is 11.3 months, ranging from 6 to 36 months. Following this introductory period, the average regular APR for cards with 0% intro APR on new purchases is 23%, ranging from 22.37% to 22.94%. These figures highlight the potential cost savings during the introductory period but also emphasize the importance of paying off balances before the standard APR kicks in to avoid higher interest charges.
Cash Advances
Cash advances remain an available option for credit cardholders but typically come with higher fees and interest rates. The average cash advance fee is $8.53, reflecting a slight increase from the previous quarter ($8.52). Additionally, cash advances often carry higher interest rates than regular purchases, making them a more expensive borrowing option.
0% Introductory Periods
Credit card companies are emphasizing balance transfers over new-purchase financing, offering 0% intro rates on balance transfers for 13.2% longer. This strategic shift is evident in the data, which reveals that while both balance transfer and new purchase introductory periods have fluctuated, the former has generally been more extended. This indicates a concerted effort by issuers to attract consumers with existing debt and provide them with more time to manage their finances without incurring interest charges.
Penalty APRs
Penalty APRs, or default interest rates, are significant fees imposed on cardholders who miss payments or violate card terms. These rates are considerably higher than standard interest rates. As of August 5, 2024, the average Penalty APR is 27.76%. This reflects an increase of 2.06% compared to Q2 2024.
Rewards
Credit card rewards are a key factor in choosing the right card. While the base earn rate – the amount you earn for everyday spending – is important, initial bonuses often offer a significant boost. For cashback cards, the average base earn rate is 1.15%, ranging from 0.25% to 2.0%. Average initial bonuses are $232.47, with a spread of $30 to $1,000.
With miles or points cards, the average base earn rate is 1.23, varying from 0.2 to 10.0 miles or points per dollar spent. Initial bonuses are more substantial, averaging 30,855 miles or points, ranging from 1,000 to 175,000 miles or points.
Fees
Credit card fees can significantly impact your overall costs, so it’s crucial to be aware of these charges when selecting a card. The average annual charge of a card is $22.22 as of Q2 2024. However, the range of annual fees is quite diverse, from $0 for no-annual-fee cards to several hundred dollars for premium cards with exclusive perks and benefits.
Average Foreign Transaction and Balance Transfer Fees also vary. The average foreign transaction fee is 1.57%, while the average balance transfer fee is 2.81%. These fees can accumulate fast, so it’s essential to consider your spending habits when choosing a card.
Credit Card Complaints
Credit card complaints have surged, with a 43.93% increase in complaints filed with the CFPB in Q2 2024 compared to the same period in 2023. Areas like credit reporting saw a staggering 280.36% increase in complaints compared to the previous year. Conversely, complaints related to delinquent accounts decreased by 42.38%.
Top Consumer Complaints
The most frequent complaints revolve around billing disputes, identity theft, and account closures, collectively accounting for around 23.91% of all complaints. Other common issues include customer service problems, difficulty paying bills, and unauthorized transactions.
Credit Card Satisfaction
Customer satisfaction with credit card issuers varies widely. U.S. Bank emerged as the frontrunner with a WalletHub Satisfaction Score of 90.33, indicating high levels of customer contentment. On the other hand, Synchrony Bank garnered the lowest score of 60.38, highlighting areas for improvement in customer experience.
Credit Card Debt as of May Each Year (Adjusted for Inflation)
Credit card debt has shown a fluctuating trend over the years. However, even after adjusting for inflation, the debt level remains higher than the previous year, indicating a persistent upward trend. As of May 2024, the debt amount stood at $1272.8 billion compared to $1228.6 billion last year.
Quarterly Credit Card Debt (Adjusted for Inflation)
Credit card debt experienced a decline during the first quarter of 2024, dropping from $1321.1 billion to $1256.6 billion compared to the previous quarter. This reduction suggests a temporary decrease in consumer borrowing. However, monitoring is essential for subsequent quarters to gauge the overall debt trajectory.