According to a recent online survey, the average annual percentage rate on new credit cards in the United States stayed put at a decent 14.97 percent after climbing a bit from the previous week.
None of cards tracked in the survey, which follows credit card behavior over extended periods of time, changed this week. This includes changes to things like promotional balance transfer interest rates, introductory interest rates, and more. The complete lack of change on credit card interest rate offers may seem alarming during this time of financial uncertainty but it is actually not unnatural. As a matter of fact, credit card issuing entities have not touched promotional offers, interest-free balance transfer rates, and low interest purchase rates for six out of the past eight weeks.
In addition to this reluctance to change promotional offers, for better or for worse, credit card issuing financial institutions have also refrained from altering interest rates. To be more specific, issuers have neither touched interest rates for 16 of the past 27 weeks in the last 6 months. Despite this, the national annual percentage rate average has risen four times and fallen seven times!
Perhaps this lack of movement regarding interest rates correlates with the fact that credit card issuers have also lacked mailing out new credit card offers. While there was once a time when credit card issuing financial institutions would aggressively pursue new accounts by flooding the market with offer mailings the recession—and credit card reformation—changed the way the industry operates.
Thus, in 2009, issuers reduced the amount of card offers they mailed by more than sixty percent, choosing to focus instead on appeasing to consumers with excellent credit. This data is confirmed by research conducted by market research firm Mintel Comperemedia, which shows that widespread mailings have not returned to pre-recession levels.
Credit Suisse analysts actually use the Mintel Comperemedia to demonstrate exactly how much the market has changed since the recession. First of all, they cite that card offers did increase between 2010 and 2011, which includes more offers to consumers with lower credit scores. Unfortunately this industry growth did not last, resulting in a reduction of new credit card offers by 43 percent in June (compared to the same statistics from the previous year). Also, June marks the fourth month since the beginning of the year that showed a decline in new credit card offer mailings.
To put things in perspective, the mailing statistics from 2012 is dramatically different from those in 2011. Just one year ago, credit card issuers exhibited much more aggressive behavior, mailing out nearly 5 billion credit card offers over the course of that year.
Over the course of the past year, however, the number of credit card offers made so far is approximately 1.5 billion, which Credit Suisse estimates will reach a total of 3.5 billion by year’s end.
If all things remain constant, the total number of credit card offers made by the close of 2012 will only slightly surpass those made in 2010. This was during a time when credit card issuers started to deal with the new regulations set forth by the Credit CARD Act of 2009, among other factors (like the recession and other regulations).
Still, researchers at Credit Suisse claim that credit card issuers are always in competition for new customers. This means that while aggressive offers may not be quite as common, innovative product and strategic development will always be on the forefront. As a matter of fact researchers say
We expect a high level of these offers to continue as long as interest rates remain low.