Barclays, Cap One moves send credit card interest rates higher

Credit card adjustments by Barclays and Capital One lifted the national average interest rate on new offers to 14.68 percent. That marked the first time in six weeks thatannual percentage rates (APRs) have increased. 

Barclays adjusted the APR range on its Carnival One World MasterCard from between 11.24 percent and 17.24 percent to between 13.99 percentand 24.99 percent. That means card applicants can expect a higher borrowing cost, regardless of their credit scores

Other banks also tweaked their offers. Capital Onediscontinued its Secured MasterCard for Young Adults card, replaced in its database with the more broadly marketed CapitalOne Secured MasterCard. That card had an APR of 22.99 percent compared with the young adult secured card's 19.80 percent APR. That change helped send the national average higher.

Overall, rates have come down from recently established record highs. ('s national average hit a record high of 14.78 percent in November.) That may not be enough to increase credit card use, however. Some analysts say that credit card spending, dampened by increased rates and limited lending following the recession, may not bounce back. 

"Consumer use of credit cards for online payments has sharply declined as issuers have tightened credit," James Van Dyke, founder and president of Javelin Strategy and Research, said in a company press release. Tighter credit typically involves higher rates, lower lines of credit and tougher approval standards. Javelin reported that although credit cards remain the most common method of Internet payment, credit card purchases fell from 44 percent of online total payments volume (TPV) in 2009 to 40 percent in 2010. Meanwhile, credit card transaction velocity -- the average number of times that a card is used monthly for online purchases -- fell sharply. 

Other analysts say that even as borrowers find credit cards easier to use, they aren't deciding to charge more purchases on plastic. "Consumers are doing little borrowing, although lenders are easing standards modestly, especially for credit cards," Moody's reported in its credit card statement on Dec. 16.

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