WASHINGTON—Credit card companies correctly predicted the Federal Reserve’s December rate hike, with the average APR for new offers rising 18 basis points in anticipation of the move and another 13 basis points afterward.
That’s a key finding from WalletHub’s Q4 2016 Credit Card Landscape Report, which also revealed that the Fed’s interest rate increase will cost consumers roughly $1.4 billion in additional credit card finance charges, among other card-related trends:
The following are more highlights from the study:
- At 11.55 months, 0% balance transfer periods are longer than at any time in the past seven years.
- Interest-free introductory terms are 17% longer for balance transfers than new purchases, and they’re followed by a regular APR that is two percentage points lower on average. “This trend, which began to emerge in Q4 2013, reinforces WalletHub’s hypothesis that issuers are more intent on attracting the balances of consumers already mired in debt than incentivizing people to incur new debt in a recovering, yet uncertain economy,” the company said.
- The value of initial rewards bonuses reached another record high in Q4 2016, with an average of $102.26 in cash or 16,864 points/miles available to new applicants. Consumers can now get 316% more cash or 140% more points/miles than they could in 2010.
- The average annual fee rose 2.19% relative to Q3 2016 and 1.64% year over year, finishing 2016 at $16.78.
- The average foreign-transaction fee, at 1.97%, has fallen 15% since Q4 2014.
- Cash-advance fees are 66% higher than they were at the end of 2012, which means credit card companies are continuing to exploit the weakness of cash-hungry customers. The average cash advance fee is now the greater of $14.73 or 4.01% of the amount withdrawn.
- Q4 2016 saw a record number of credit-card complaints for the fourth quarter of a year, with almost 20% more complaints being levied than in Q4 2015.
- Complaints related to “credit card protection/debt protection” and “payoff process” increased the most from Q3 to Q4, rising by 32.6% and 25.1%, respectively. Meanwhile, complaints regarding the “rewards” and “advertising and marketing” fell the most, dropping by 47.1% and 14.7%, respectively.
- The top consumer complaint category, “collection,” has declined in popularity for five straight quarters, falling 44% over that span, perhaps due to the Consumer Financial Protection Bureau’s crackdown on the industry.
- Consumers were happiest with BB&T Financial during the fourth quarter of 2016, with the institution earning a WalletHub Satisfaction Score of 93.44. Synchrony Bank had the least-pleased consumers, with a Satisfaction Score of 59.39.