Rate survey: Credit card interest rates hold at 14.95 percent
Interest rates on new credit card offers remained
static Wednesday, according to the CreditCards.com Weekly Credit Card Rate
|CreditCards.com's Weekly Rate Report
||6 months ago
|Methodology: The national average credit card APR is comprised of 100 of the most popular credit cards in the country, including cards from dozens of leading U.S. issuers and representing every card category listed above. Introductory, or teaser, rates are not included in the calculation.
|Updated: Feb. 27, 2013
The national average annual percentage rate (APR)
remained at 14.95 percent, after falling the previous week for the first time
in nearly a month.
Wells Fargo prompted last week's dip in rates by
lowering the APR on its student credit card.
The move -- which was the first by Wells
Fargo in months (at least among the cards tracked by CreditCards.com) -- barely dented the national average, pushing it down by
just a hundredth of a percentage point.
Most credit card issuers have refrained from making
significant changes to their offer terms for much of the past year.
many are choosing to selectively adjust offers on just a small number of cards. As
a result, the national average hasn't moved below 14.9 percent since February
card mail volume leaps
Most credit card issuers have also remained relatively conservative with their
marketing efforts in recent months. For example, issuers dialed back the number of card offers they mailed to consumers
in 2012 by nearly 40 percent compared to the previous year, according to research by Mintel
Issuers' appetites for new customers may be increasing, however.
Issuers mailed 16 percent more offers in January
2013 than they did in December 2012, according
to a research note released Feb. 25 by the financial services firm Credit
Suisse, citing Mintel Comperemedia research. Compared to the same period in 2011, credit card mailings jumped an impressive 21 percent.
The double-digit leap in mail volume is significant,
considering how flat credit card mail volume was for most of 2012.
After dropping precipitously in December 2011, mail
volume fluctuated somewhat in early 2012, but remained exceptionally flat in
the summer and fall. By the end of the year, Mintel Comperemedia research shows
that credit card mail volume dropped by 38 percent in 2012 compared to 2011, according to a Jan. 22 research note by Credit Suisse.
When mail offers dropped, experts partly attributed it to a shift in marketing strategy. For example, rather than
rely as heavily on mailing credit card offers to consumers' mailboxes, which
can get expensive, many issuers are experimenting with other ways
to reach new customers.
In addition, the feeble economic recovery in the
U.S. and the ongoing fiscal uncertainty created by ongoing legislative battles
over government spending and taxation also played a significant role in
dampening issuers' appetites, experts say.
Consumer spending, for example, was relatively weak
throughout 2012, with credit card debt unexpectedly dropping by more than 5
percent in the final month of the year, according to consumer debt research by the Federal Reserve. The unemployment rate, meanwhile, declined in 2012, but barely,
beginning the year at 8.3 percent and ending it at 7.8 percent, according to
the Labor Department.
Currently, both consumers and businesses are facing significant uncertainty over the impact that federal spending cuts, which as of press time
are still scheduled to take effect, will have on the economy.
However, credit card issuers, at least, appear to be feeling confident enough in the overall direction of the U.S. economy that they're
willing to hunt for new customers more aggressively.
"We believe that
2013 will see moderately increasing competition for revolving balances," wrote
Credit Suisse analysts Moshe Orenbuch and Meredith Roscoe in a research note about
last month's jump in credit card mailings. Already, competition between credit card issuers is strong, they say, especially when it comes to reaching out to cardholders with deeper pockets.
confidence is also up
Consumers, meanwhile, are also feeling somewhat better about the economy as well -- at least for
Significantly more consumers reported feeling optimistic about the
U.S. economy in February after reporting increased pessimism the previous month, according to a new report from the Conference Board,
released Feb. 26.
"Consumer Confidence rebounded in February as the
shock effect caused by the fiscal cliff uncertainty and payroll tax cuts appears
to have abated," said the Conference Board's Lynn Franco in a statement. "Consumers'
assessment of current business and labor market conditions is more positive
than last month. Looking ahead, consumers are cautiously optimistic."
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Published: February 27, 2013