Rate survey: Credit card interest rates stay put

Interest rates on new credit card offers stood still this week, according to the Weekly Credit Card Rate Report.’s Weekly Rate Report
 Avg. APRLast week 6 months ago
National average 14.97%14.97%14.91%
Low interest10.40%10.40%10.40%
Balance transfer12.62%12.62%12.60%
Cash back 14.43%14.43%14.45%
Airline 14.63%14.63%14.54%
Instant approval15.49%15.49%15.49%
Bad credit23.64%23.64%23.41%
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: Aug. 1, 2012

The national average annual percentage rate (APR) on new card offers remained at 14.97 percent Wednesday, after climbing the previous week.

None of the cards that tracks changed this week. That includes changes to promotional balance transfer offers and introductory purchase rates.

The lack of movement on card offers isn’t unusual, however, in the current card climate. In the past two months, issuers have left promotional offers — including short-term interest-free offers on balance transfers and purchases — alone for six weeks out of eight.

Issuers have also been reluctant to alter interest rates. In the past six months, issuers have left rates alone 16 weeks out of 27. During that time, the national average APR has increased four times and declined seven.

Issuers also cut back on credit card mailings
The lack of movement comes at a time when issuers have also been pulling back on mailing new credit card offers to consumers.

Prior to the recession, issuers flooded consumers’ mailboxes with card offers and aggressively sought out new customers with a wide variety of credit scores. However, in 2009, issuers slashed the number of card offers they mailed by nearly two-thirds and primarily concentrated the offers they did send on consumers with excellent credit, say industry analysts. Since then, credit card mailings have yet to bounce back to pre-recession levels, according to data from the market research firm Mintel Comperemedia.

Issuers did ramp up the number of card offers they sent in 2010 and 2011 and even began to send more offers to consumers with lower credit scores. However, issuers have since cut back significantly, say analysts at the international financial services firm Credit Suisse.

Citing research from Mintel Comperemedia, Credit Suisse analysts say that the number of credit card offers that consumers received in June is down by 43 percent, compared to the same time last year. June also marks the fourth month since January that the number of credit card mailings sent to consumers has declined.

The lower level of credit card mailings in 2012 contrasts significantly with 2011. Then, issuers sought out new customers aggressively, mailing out a total of 4.8 billion credit card offers throughout the year. By contrast, issuers have sent out just 1.5 billion offers in 2012, and analysts at Credit Suisse estimate that the total number of offers sent out by the end of the year will total just 3.5 billion.

If analysts’ estimates hold out, then the number of credit card offers mailed in 2012 will be just slightly more than the number of credit card offers that were mailed in 2010. During that time, issuers were still just shaking off the effects of the recession and contending with new financial regulation, including the Credit CARD Act of 2009. Now, issuers are contending with a series of banking scandals, a financial crisis in Europe and a painfully slow U.S. economic recovery.

Despite the sluggish growth in card offers, researchers at Credit Suisse say that issuers are still actively competing for new customers. As for the card offers they do mail, issuers are focusing heavily on rewards cards that don’t carry annual fees, say analysts. “As we have written before, we believe that this is one of the new features in the current competitive environment, with three-quarters of all offers focused on rewards, with heavier rewards components than in the past.”

Issuers also continue to send out a high number of credit card offers with 0 percent balance transfer offers and promotional APRs. “We expect a high level of these offers to continue as long as interest rates remain low,” added researchers.  

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