Consumers Getting Squeezed By Rising Credit Rates, Falling Bank Yields

The personal finance websites CardHub and WalletHub today released their Q1 2016 Credit Card and Banking Landscape Reports, which revealed that consumers are getting squeezed by deteriorating rate trends: rising credit card interest rates, coupled with falling banking yields.

Credit card rates posted across-the-board increases on a year-over-year basis during Q1, rising 2.3% on average. Meanwhile, savings account yields fell 6.79% year-over-year.

Below you can find a handful of additional key findings from the reports.

  • Q1 2016 marked a peak for credit card complaints, with the overall volume rising by 38% from the previous high in Q4 2015.
  • A number of credit card terms are at historical levels, with high cash-advance and annual fees on the negative end of the spectrum and lucrative rewards and 0% rates providing a positive note.
  • Personal online-only savings accounts provide the market’s highest interest rates – offering 15X greater returns than savings accounts from national banks, which are the worst option.

Rising Credit Rates

For the full reports, please visit:

Credit Card: http://www.cardhub.com/edu/credit-card-landscape-report/

Banking: https://wallethub.com/edu/banking-landscape-report/1629/

 

Rising credit rates
Rising credit rates

Q1 Main Findings

RATES

  • Personal online-only savings accounts provide the market’s highest interest rates – offering 82% greater returns than the runner-up, personal online-only checking accounts. Such accounts yield 0.65% and 0.36% on average, respectively.
  • Overall, savings account rates actually declined significantly (6.79%) in Q1 2016 relative to the same period the year prior.
  • People in the Northeast and West continue to receive significantly lower returns on checking and savings accounts than those in the rest of the country. Checking account APYs are 71% lower on average, while savings account APYs are 44% lower.
  • Interest rates on high-balance checking accounts increased significantly during the first three months of 2016, rising 13.85% for a balance of $10,000, 18.96% for a balance of $25,000 and 24.88% for a $50,000 balance.
  • FEES
    • Consumers looking for the lowest fees on checking accounts should focus on offers from credit unions, which are 25% cheaper than online checking accounts – the next-best option – on average.
    • Monthly checking account fees and the minimum balance required to avoid such fees both increased significantly during Q1 2016, relative to the same period in 2015: 13.69% and 16.89%, respectively.
    • Non-bank ATM fees continued their fall as 2016 began, dropping 9.38% on a year-over-year basis during Q1 to cap off an 18% decline since the beginning of 2014.

Rising Credit Rates