Rates remain flat for 3rd straight week

CreditCards.com

Interest rates on new credit card offers remained unchanged this week, according to the CreditCards.com Weekly Credit Card Rate Report.

The national average annual percentage rate (APR) remained at 14.95 percent Wednesday. This is the third straight week that issuers have left credit card APRs alone.

Card issuers' busy summer
Despite leaving interest rates alone this week, some issuers have been experimenting with other card terms over the past month.

Last week, for example, American Express sweetened the promotional terms on three of its flagship credit cards. Applicants who apply for the Blue Cash card, the Blue Sky card or the Blue card may now qualify for interest-free balance transfers for up to 15 months. The issuer also extended the amount of time cardholders can carry a balance on new purchases without paying interest from 12 months to 15 months.

Barclays, meanwhile, tested a new promotional offer on one of its airline credit cards. The issuer briefly introduced a 12-month, 0 percent APR to the U.S. Airways Premier World MasterCard earlier this month. In addition, Barclays shortened the card's balance transfer period from 15 months to 12 months.

The test offer didn't last long, however. The issuer eliminated the card's interest-free offer on purchases the following week and reinstated the card's 15-month promotional balance transfer offer. Since then, Barclays has left the terms on the U.S. Airways World MasterCard alone.

Two other top issuers, Discover and Chase , implemented some changes this month as well. In the first week of August, Discover increased the maximum possible APR on the Discover "it" card for students by 3 percentage points. Students who apply for Discover's flagship credit card may now receive an APR as high as 21.99 percent. The change didn't affect the national average, however, because CreditCards.com considers only a card's lowest possible rate when calculating its national average on credit card interest rates.

Chase, meanwhile, increased the lowest possible APR on the Chase Slate card from 11.99 percent to 12.99 percent. The higher rate on the Slate card would have caused the national average to spike. However, the card's higher APR was offset by another change to the CreditCards.com database that occurred in the same week. 

Around the same time that Chase increased the APR on the Slate card, Capital One stopped promoting the Cash Rewards for Newcomers card online. To reflect the change in Capital One's lineup, CreditCards.com replaced the Cash Rewards for Newcomers card with a lower interest credit-building card. As a result, the national average fell to 14.95 percent on Aug. 7, despite the slightly higher rate on the Chase Slate card.

Stepped-up competition
Card issuers are testing new offers far more frequently than they did earlier in the year, when weeks would go by without a single offer change.

The recent spike in activity is a sign that issuers are pouring more resources into their marketing efforts and competing more fiercely for new customers. Over the past several months, for example, issuers have not only revised terms more often, they have also substantially increased the number of offers they send to consumers' homes.

According to fresh data from the market research firm Mintel Comperemedia, for example, issuers mailed 355 million offers in July -- up 8 percent from June.

Overall, issuers sent significantly more mail this summer than they did in the first three months of the year. From May 2013 to July 2013, for example, issuers sent an average of 366 million offers per month, according to data released Aug. 21 by the financial services firm Credit Suisse, citing Mintel Comperemedia research. In the first three months of the year, issuers mailed an average of just 303 million offers per month.

Year-over-year, the spike in the number of credit card offers that issuers are now sending is even more substantial: Credit card mail volume was up 54 percent last month, compared with July 2012.

By the end of the year, Credit Suisse analysts expect that issuers will have mailed approximately 20 percent more offers in 2013 than they did in 2012.

Consumer confidence also ticks up
Consumers have been reluctant to use their credit cards for much of the past year. However, some cardholders may be more receptive to new card offers in the months ahead, according to new research.

Consumer confidence, for example, rose slightly in August, after falling in July, according to research released Aug. 27 by The Conference Board.

The slight increase in consumer optimism is particularly significant to credit card issuers since it could portend a greater eagerness to spend. Each month, economists and other analysts pay close attention to consumer confidence readings because they often foretell just how eager consumers may be to let go of their cash.  

This month, consumers told researchers they expected business conditions to gain ground in the months ahead and predicted that the number of jobs available would increase as well.

A larger number of consumers also told researchers that they expected to get a raise sometime in the next six months, giving them more confidence to spend.

See related: N.Y. Fed: Debt squeeze eases on households ,  Fed: Card balances fell in June

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