Credit Card Competition Heats Up
At this time of year the financial spotlight usually focuses on new ISA deals, as banks try to outdo each other’s offers ahead of the early April deadline. However a number of increasingly generous credit card deals have highlighted fierce rivalry among card providers and ensured the credit market has taken centre stage in the news this March. In a series of posts I will be examining the current deals and how credit card offers have changed and developed pre-, during, and post-recession and what this means for affiliates.
Credit card deals have become increasingly competitive over the past year, culminating in a record 0% introductory balance transfer period which was set by Barclaycard’s Platinum Visa card this month. In fact Barclaycard’s offer period has extended by a whopping three months since February, which was when Nationwide replaced its Gold Card with the Nationwide Credit Card and increased its introductory 0% balance transfer offer to 17 months, putting it joint first place with market leader Barclaycard. Barclaycard quickly extended its offer period to 18 months to take back the top of the table. Then last week, MBNA and Virgin each increased their 0% introductory offers from 16 to 18 months, matching Barclaycard’s offering. Within hours Barclaycard had responded by extending its offer to a staggering 20 months, the longest introductory 0% balance transfer period ever offered by a credit card.
And it’s not just balance transfer offers that are competing to lure customers. Last week also saw the launch of two new generous cashback cards, both from MBNA. The MBNA Amex with cashback offers 1.5% on petrol and supermarket purchases in all the major retailers and 0.75% everywhere else, while the more widely accepted MBNA Visa with cashback earns cardholders 1.25% cashback at major petrol and supermarket outlets, and 0.5% everywhere else.
So what has prompted these generous offerings at a time of economic hardship with lending supposedly at its lowest levels? Well, it seems it is the borrowers who are cautious rather than the lenders. “The surge in competition between card issuers has been driven by improvements in bad debts, lower borrowing from customers and greater interest in attracting customers.” Elaine Moore at The Financial Times reported last week. In fact January saw borrowing at its lowest levels for six years, so it’s easy to see why card providers are so keen to hook new customers. Additionally these deals are still only available to those with good or excellent credit ratings, minimising the lending risk.
So as providers are trying to appeal to ever more cautious borrowers, affiliate programs have a hugely important role to play in encouraging new custom for credit card merchants. The new deals provide a great opportunity to push consumer interest, and in return publishers should reap the rewards.
Next week I will look at the offers that were on the market before the recession to see how they compare to 2011’s deals.
[...] returns. Credit card providers are keen to pick up these new customers; as mentioned previously on this blog, there are currently great deals to be had by consumers with good credit scores. So after the [...]
[...] question is why Barclaycard has improved its offering by such a significant amount. As reported on this blog back in March when Barclaycard launched its previous 20-month offer, lower levels of lending have [...]