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2011 Credit Card Landscape Report

CardHub-2011-Credit-Card-Landscape-StudyWhile interest rate fluctuations continue to belie the economy’s future uncertainty, credit card issuers aren’t letting that stop them from bolstering their customer bases against future financial turbulence.  Having learned a valuable lesson about the importance of financially secure customers who are able to stay current on their bills even during tough economic times, banks are using increasingly lucrative initial rewards bonuses and 0% financing deals to entice consumers who maintained above-average credit standing throughout the downturn.  They are also lowering certain fees that are particularly important to savvy consumers – such as balance transfer fees and foreign transaction fees – while offsetting lost revenue by increasing other account costs, like cash advance fees, that people don’t tend to give much weight when contemplating an application.

It’s important to note, however, that one of the reasons credit card companies can afford to give away hundreds of dollars in free rewards and waive interest for up to 21 months is the fact that delinquency and charge-off rates have declined since the end of the Great Recession.  In other words, if we want these valuable offers to have staying power, we’ll need to use them to pay down existing debt and institute sustainable lifestyles, rather than allowing them to become an excuse to overspend and perpetuate past mistakes.

You can find detailed information about how the credit card landscape changed during 2011 below.  Keep in mind that information regarding the first two quarters of the year may be limited due to the fact that we started tracking landscape changes in the second half of the year.

Q3 Main Findings

  • In Q3 2011, the average balance transfer fee decreased relative to the previous quarter.
  • The average introductory period for credit cards offering 0% introductory APRs increased in Q3 of 2011.
  • The initial bonus for rewards credits has become significantly more generous this quarter.

Q4 Main Findings

  • Regular APRs rose across the board relative to Q4 2010 – Relative increases between 3.5% and 9.5% were observed among credit cards for excellent, good, and fair credit as well as secured credit cards, whereas interest rates for student and business credit cards rose less than 1% in relative terms.
  • 0% introductory terms are over 27% longer than in Q4 2010 – 0% intro terms now range from 6 to 21 months, a development that most likely explains the aforementioned rise in regular APRs.  It appears that issuers are willing to sacrifice interest revenue in the early stages of the customer life cycle in the hopes of attracting more new customers and recouping this revenue later on through higher regular APRs.
  • Balance transfer fees & foreign exchange fees fell, cash advance fees rose -  With fees now more transparent thanks to the CARD Act, it seems that competition is driving down those most important to consumers.  Cash advances continue to signal risk to creditors, however, making it unlikely that cash advance fees will fall anytime soon.
  • Initial rewards bonuses increased significantly – The average cash back initial bonus is over 100% higher relative to Q4 2010; points and miles bonuses are up nearly 10%.
  • Cash back rewards are 60% more lucrative – While the card with the best cash back rate across all purchases offered only 1.25% in Q4 2010, base rates as high as 2% are now available.

Data & Graphs

Interest Rate Landscape

Q1 2011
(vs. last yr)
Q2 2011
(vs. last yr)
Q3 2011
(vs. last yr)
Q4 2011
(vs. last yr)
Q4 vs. Q3
Change
Excellent Credit N/A 12.72% (N/A) 12.81% (+3.06%) 12.93% (+3.52) 0.94%
Good Credit N/A 16.66% (N/A) 17.04% (+6.04%) 17.03% (+5.25%) -0.06%
Fair Credit N/A 19.31% (N/A) 19.34% (-0.26%) 19.37% (+8.15%) 0.16%
Secured Credit Cards N/A 19.38% (N/A) 19.40% (+9.60%) 19.40% (+9.48%) 0.00%
Student Credit Cards N/A 15.94% (N/A) 15.97% (-0.50%) 15.91% (+0.25%) -0.38%
Business Credit Cards N/A 15.27% (N/A) 15.22% (+0.07%) 15.28% (+0.66%) -0.39%

 

Balance Transfer Landscape

Q1 2011
(vs. last yr)
Q2 2011
(vs. last yr)
Q3 2011
(vs. last yr)
Q4 2011
(vs. last yr)
Q4 vs. Q3
Change
Average Length of 0% APR Intro Period (in months) N/A 7.44 (N/A) 8.97 (+20.89%) 9.67 (+29.97%)  7.08%
Range of 0% APR Intro Periods (in months)  N/A  6-21 (N/A) 6-21 (N/A) 6-21 (N/A)  N/A
Average Regular APR for Cards that have 0% Intro APR on Balance Transfers  N/A  16.39% (N/A) 16.66% (+3.67%) 16.68% (+3.28%)  0.12%
Range of Regular APRs for Cards that have 0% Intro APR on Balance Transfers  N/A  7.24% – 24.99% (N/A) 7.24% – 24.99% (N/A) 7.24% – 24.99% (N/A)  N/A
Average Balance Transfer Fee for Cards with 0% Intro APR on Balance Transfers  N/A  2.88% (N/A) 2.82% (-8.44%) 2.89% (-6.47%)  2.48%

 

New Purchase Landscape

Q1 2011
(vs. last yr)
Q2 2011
(vs. last yr)
Q3 2011
(vs. last yr)
Q4 2011
(vs. last yr)
Q4 vs. Q3
Change
Average Length of 0% Intro Period (in months) N/A 8.27 (N/A) 8.99 (+22.31%) 9,26 (+27.02%) 3.00%
Range of 0% APR Intro Periods (in months) N/A 6-21 (N/A) 5-21 (N/A) 6-21 (N/A) N/A
Average Regular APR for Cards that have 0% Intro APR on New Purchases N/A 16.34% (N/A) 16.50% (+3.19%) 16.43% (+2.05%) -0.42%
Range of Regular APRs for Cards that have 0% Intro APR on Purchases N/A 7.50% -24.90% (N/A) 7.50% -24.90% (N/A) 7.50% -24.90% (N/A) N/A

 Rewards Landscape

Cash Back

Q1 2011
(vs. last yr)
Q2 2011
(vs. last yr)
Q3 2011
(vs. last yr)
Q4 2011
(vs. last yr)
Q4 vs. Q3
Change
Average Base Earn Rate N/A 0.97 (N/A) 1.00 (0.00%) 0.99 (+5.32%) -1.00%
Range of Base Earn Rate N/A 0.25% – 1.25% (N/A) 0.25% – 2% (N/A) 0.25% – 2% (N/A) N/A
Average Initial Bonus N/A $40.34 (N/A) $49.7 (102.20%) $57.94 (101.25%) 16.58%
Range of Initial Bonus N/A $10 – $250 (N/A) $10 – $250 (N/A) $10 – $250 (N/A) N/A

Miles or Points

Q1 2011
(vs. last yr)
Q2 2011
(vs. last yr)
Q3 2011
(vs. last yr)
Q4 2011
(vs. last yr)
Q4 vs. Q3
Change
Average Base Earn Rate (in miles or points) N/A 1.06 (N/A) 1.06 (+1,92%) 1,06 (+0,95%) 0.00%
Range of Base Earn Rate N/A 0.5 – 5 miles/points (N/A) 0.5 – 5 miles/points (N/A) 0.5 – 5 miles/points (N/A) N/A
Average Initial Bonus (in miles or points) N/A 8,924 (N/A) 9,620 (+36.86%) 9,221 (+9.49%) -4.15%
Range of Initial Bonus N/A 50 – 50,000 miles/points (N/A) 500 – 50,000 miles/points (N/A) 500 – 60,000 miles/points (N/A) N/A

Fees

Q1 2011
(vs. last yr)
Q2 2011
(vs. last yr)
Q3 2011
(vs. last yr)
Q4 2011
(vs. last yr)
Q4 vs. Q3
Change
Average Maximum Late Fee N/A $32.47 (N/A) $32.65 (-0.82%) $32.70 (-0.27%) 0.15%
Average Foreign Transaction Fee N/A 2.44% (N/A) 2.46% (+0.82%) 2.42% (-3.20%) -1.63%
Foreign Transaction Fee Range N/A 0% – 3% 0% – 3% 0% – 3% N/A
Average Balance Transfer Fee for Cards with Intro Balance Transfer APR N/A 2.82% (N/A) 2.75% (-8.03%) 2.85% (-5.94%) 3.64%

Penalty APRs

Q1 2011
(vs. last yr)
Q2 2011
(vs. last yr)
Q3 2011
(vs. last yr)
Q4 2011
(vs. last yr)
Q4 vs. Q3
Change
Average N/A 27.90% (N/A) 28.40% (+3.00%) 28.46% (+2.00%) 0.00%
Range N/A 17.99% – 30.99% (N/A) 17.99% – 31.99% (N/A) 17.99% – 31.99% (N/A) N/A

Cash Advances

Q1 2011
(vs. last yr)
Q2 2011
(vs. last yr)
Q3 2011
(vs. last yr)
Q4 2011
(vs. last yr)
Q4 vs. Q3
Change
Average APR N/A 22.32% (N/A) 22.46% (+3.00%) 22.26% (+2.00%) -1.00%
APR Range N/A 6.25% – 49.90% (N/A) 6.25% – 49.90% (N/A) 6.25% – 49.90% (N/A) N/A
Average Cash Advance Fee % N/A 3.70% (N/A) 3.74% (+4.76%) 3.75% (+4.46%) 0.27%
Average Cash Advance Fee $ Amount N/A $8.82 (N/A) $8.85 (+0.80%) $8.86 (+0.34%) 0.11%

Credit Card Debt

Q1 2011
(vs. last yr)
Q2 2011
(vs. last yr)
Q3 2011
(vs. last yr)
Q4 2011
(vs. last yr)
Q4 vs. Q3
Change
Accumulation N/A $18.1 billion (+66.00%) $16.8 billion (+154%) $45.48 billiion (+30%) N/A
Delinquency Rate* N/A 3.50% (N/A) 3.47% (+1.02%) 3.32% (-21%) -4.00%
Charge-Off Rate* N/A 5.58% (N/A) 5.63% (-2.92%) 7.53% (-2%) 25.00%

*Not seasonally adjusted

Unemployment

Q1 2011
(vs. last yr)
Q2 2011
(vs. last yr)
Q3 2011
(vs. last yr)
Q4 2011
(vs. last yr)
Q4 vs. Q3
Change
Unemployment Rate N/A 9.1% (N/A) 9.1% (-5.20%) 8.5% (-9.60%) -6.60%

Notable 2011 Credit Card Offers

Small Business:

 

This report was compiled using data from the 1000+ credit card offers that CardHub.com monitors on a daily basis. For questions or more information regarding this report, please contact our media department.

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