Interest rates on new credit card offers stayed put for the
second straight week, according to the CreditCards.com Weekly
Credit Card Rate Report.
The national average annual percentage rate (APR) on new card
offers remained unchanged at 14.91 percent Wednesday.
None of the cards that CreditCards.com tracks featured offer
changes this week. That includes changes to promotional balance
transfer offers and promotional APRs.
Issuers have left card offers alone for much of 2012. In
previous years, issuers tinkered with the terms of their credit
card offers much more often. For example, they regularly
experimented with new promotions, such as lengthening the
interest-free period on a balance transfer offer, and frequently
altered interest rates.
In the past year, however, the national average APR has moved
just 11 times since Jan. 1, 2012. By contrast, the national average
moved 24 times during the same period in 2010.
Issuers gain new way to target potential customers
Despite the relative lack of movement on credit card offers that
are issued online, issuers are still actively going after
consumers.
Issuers mailed more than 632 million credit card offers in the
first quarter of 2012, according to research on credit card
mailings by Ipsos Competitive Tracking Services. Meanwhile, more
than 9 million new credit card accounts were opened during the same
period, according to Equifax's National Consumer Credit Trends
Report.
Traditionally, issuers often consider a consumer's credit score
before they mail an offer. Now, issuers have access to a new type
of credit score designed to help credit card marketers decide which
consumers to target.
Dubbed the True In-Market Propensity (TIP) Score by Equifax, the
score is supposed to give marketers deeper insight into whether a
consumer is likely to accept a pre-screened credit card offer. The
score also estimates a consumer's likelihood to borrow using a
credit card and how likely the consumer is to pay his or her credit
card bills on time.
"As the economy continues to recover and U.S. consumers' debt
position improves, card issuers are now beginning to ramp up their
direct marketing efforts," said Scott Waid, Equifax's Senior Vice
President of Product Innovation and Management in a press release
accompanying the score's announcement. "However, issuers are
monitoring the return on investment of their marketing budgets much
more closely than they had pre-recession. TIP Scores provides the
most direct route to help card issuers achieve their marketing
goals by more clearly identifying and targeting those select
consumers with the highest true propensity to accept their offer."
Missed credit card payments continue to drop
Meanwhile, issuers' balance sheets are also healthier this summer,
thanks to fewer consumers missing payments on their credit cards.
As a result, issuers have more flexibility to go after a broader
range of new customers.
Missed payments on most loan types decreased in June, according
to the S&P/Experian Consumer Credit Default Indices. That
includes missed payments on bank cards, which dropped by 38 basis
points (0.38 percent). As a result, consumer defaults on bank cards
reached their lowest levels since 2007.
"There is only positive news in June's numbers," said David M.
Jones, Managing Director and Chairman of the Index Committee for
S&P Dow Jones Indices in a statement. "In the past three years,
households have come a long way in repairing their balance sheets.
Looking across our 10 headline indices, only one -- bank cards --
shows default rates above 2.5 percent and even those are close to
their eight-year historic low."