Average rates on new credit card offers lifted this week, according to the CreditCards.com Weekly Credit Card Rate Report.
The national average annual percentage rate (APR) rose to 15.02 percent Wednesday after Capital One increased the APR on a cash-back credit card by 3 percentage points. This is the first time in nearly a year that the national average has risen above 15 percent.
Capital One spurred this week's rate change by hiking the APR on its QuicksilverOne Cash Rewards card from 19.8 percent to 22.9 percent. Now, five out of six of Capital One cards for consumers with average credit have an APR of 22.9 percent or higher.
Barclays also revised an offer this week. The issuer eliminated the promotional APR on the US Airways Premier World MasterCard and extended the card's interest-free balance transfer offer from 12 months to 15 months. This is the fourth time in the past five weeks that Barclays has changed the promotional terms on the US Airways card.
Card issuers step up competition
Barclays isn't the only card issuer testing new promotional offers these days. As the economy slowly improves, several of the nation's largest credit card issuers -- including Citi, Capital One and Bank of America -- are ramping up the amount they spend courting new consumers.
According to new data from the market research firm Mintel Comperemedia, the competition for new cardholders is getting fierce.
Issuers mailed 363 million card offers to consumers' homes in August, according to Mintel research -- which is more than twice the number of offers they mailed during the same time last year.
In a research note released Sept. 23, analysts at the financial services firm Credit Suisse said that competition between issuers has intensified in recent months and is expected to heat up even further as the year goes on.
As card issuers continue to increase the amount of mail they send to prospective customers, analysts at Credit Suisse now forecast that total credit card mail volume will reach 3.9 billion pieces by the end of the year. That's 30 percent more offers than issuers mailed last year, when issuers' spending on direct mail offers slowed considerably.
The substantial increase in the number of offers that issuers are now mailing is a good sign that lenders are feeling relatively confident about their financial prospects. Analysts often pay close attention to credit card mail volume because it helps shed light on how bullish issuers are feeling about the economy and about consumers' ability to repay their loans.
It's a good sign for consumers, too: More competition for their business means they should have more success at shopping for better deals.
After a wrenching half-decade of slow economic growth, consumers are now slowly rebuilding their finances and are far more likely to repay their bills on time than they were just a few years ago.
Issuers, in turn, are hoping that by mailing consumers a larger number of enticing offers, they'll encourage more cardholders to replace the cards they have and significantly increase their spending.
The odds that consumers will spend as much as issuers would like in the months ahead, however, remain slim -- particularly since many consumers are feeling increasingly pessimistic about the future.
Consumer confidence dips in September
New research released Sept. 24 by the Conference Board shows that consumers' moods have soured in recent weeks.
According to the Conference Board's Consumer Confidence Index, consumers' overall confidence slipped this month after ticking up slightly in August.
Consumers reported feeling increasingly skeptical that the labor market will improve over the next few months, according to the report. They also felt less confident about the likelihood that they will earn a raise.
"While overall economic conditions appear to have moderately improved, consumers are uncertain that the momentum can be sustained in the months ahead," said the Conference Board's Lyn Franco in a statement .
"Consumers' assessment of current business and labor market conditions, however, was more positive," she said. For example, according to the Conference Board's most recent survey, consumers not only feel better than they used to about the current business climate, they also think it's easier to get hired if you're out of a job.
The percentage of consumers who say that jobs are "hard to get" these days has fallen to its lowest level in five years, say researchers.