Interest rates on new credit card offers remained at 14.96
percent Wednesday, according to the CreditCards.com Weekly Credit
Card Rate Report.
None of the cards CreditCards.com tracks featured rate or offer
changes this week. However, that's nothing new.
So far, most issuers have been content to leave credit card
terms alone in the opening weeks of 2013. Among those issuers that
have tweaked offers, the changes have been minor.
was the first issuer to break an 11-week stretch in which APRs on
existing cards remained the same by raising the rate on the Amazon
Rewards card by 1 percentage point.
also made a rare offer change last week by eliminating the
promotional balance transfer offer on its JetBlue credit card. It
was the first time in six weeks that CreditCards.com recorded an
issuer changing a card's promotional rate.
Competition slowing down?
Credit card issuers appear to be taking a hands-off approach to
credit card offers for the time being. For example, rather than
compete for new customers by frequently altering the amount of time
a promotional offer, such as an
introductory balance transfer rate
, lasts, many issuers are choosing one promotional offer that works
and sticking to it.
Few issuers made major changes to promotional offers in 2012,
according to CreditCards.com data. That's in stark contrast to
previous years when issuers frequently attempted to lure new
customers by introducing longer-term promotions for a temporary
period, then rolling those promotions back.
"We're not seeing the 18- or 21-month [promotional] interest
rate we have in the past," says Andrew Davidson, a senior vice
president at Mintel Comperemedia, which tracks direct mail
Issuers are instead competing more directly with rewards, he
says. "There's still a lot of competition and innovation in
rewards," says Davidson.
As for other, more traditional ways to compete, issuers appear
to be more passive.
For example, issuers aren't widely cutting interest rates these
days, notes Davidson. In fact, standard interest rates were so
stable in 2012 that the national average APR remained the same a
record 36 weeks out of 52, according to CreditCards.com research,
and hovered within rounding distance of 15 percent all year.
Davidson says that the stability in rates -- and relatively high
average -- is largely due to rules imposed by the
Credit CARD Act of 2009
, which limit issuers' ability to change a current cardholder's APR
without 45 days' advance notice. That lack of flexibility makes
issuers less willing to offer a lower APR upfront, say experts.
In addition, issuers cut back substantially on the number of
credit card mailings they sent in 2012, according to Mintel
Comperemedia research, after ramping up the number of offers they
sent in 2011.
Experts say that the volume of credit card offers that issuers
send out is often a good indication of how hungry issuers are for
new customers. However, in this case, issuers appear to not only be
taking a more cautious, less aggressive approach to how they market
cards to consumers; many issuers are also actively testing fresh
ways to reach potential customers, says Davidson. That, in turn, is
causing the volume of direct mail offers sent to potential
cardholders to go down.
"Basically, volumes have been flat in 2012," says Davidson. "We
saw this aggressive period of expansion following the recession.
Since then, issuers have cooled off and it seems to have bottomed
Now, "we seem to be reaching a period of stability," he
Issuers are also remaining cautious about the United States'
fragile economic recovery and that is playing a significant role in
their decision-making, says Davidson.
"As the economy strengthens, I think we will see some recovery
in volumes," says Davidson. However, it's unlikely to return to the
way it was prior to the recession when issuers flooded consumers'
mailboxes with offers, says Davidson -- particularly now that
issuers are discovering new ways to market their cards. "It's just
a different world now," he says.
Banks remain reluctant to ease terms on new