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2/13/2013 8:00:00 PM
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.
Last week, Chase 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.
American Express 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?
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 offers.
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 out."
Now, "we seem to be reaching a period of stability," he says.
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.See related: Banks remain reluctant to ease terms on new cards