Credit Card Balance-Transfer Activity Down, Average Balances Up, Says Cardbeat

WESTBURY, N.Y.--(BUSINESS WIRE)--Consumers are maintaining their existing credit card relationships rather than rolling outstanding balances over to other cards, according to research recently conducted by Auriemma Consulting Group (ACG).

“Interest rate competitiveness among credit card companies is reducing the incidence of balance transfers. The average balance carried on cards continues to increase, but consumers are not being enticed to move those balances to alternative lines of credit”

Cardbeat^® found that only 15% of credit card holders had transferred a balance in the past year, and 43% of those respondents said their last balance transfer was for an amount of $2,000 or less. Besides not carrying credit card balances in the first place—so not having anything to transfer—the most frequently cited reason respondents gave for not moving the amount they owed from one credit card to another was satisfaction with their current interest rate.

“Interest rate competitiveness among credit card companies is reducing the incidence of balance transfers. The average balance carried on cards continues to increase, but consumers are not being enticed to move those balances to alternative lines of credit,” says Megan Bramlette, managing editor of Cardbeat, a syndicated market research report published by ACG. “Cardholders are extending the life of their relationships with credit card companies rather than transferring their outstanding balances to different cards.”

“Banks wishing to entice consumers to transfer their credit card balances may need to introduce low promotional rates good for one to six months or even the life of the loan, or offer rewards on balance transfers,” she continues.

The information in this release came from a survey of 399 credit card users in April 2007 and was recently published in Cardbeat, a monthly market research report that provides insight into how consumer perceptions impact credit card acquisition and usage.

ACG is a management consulting firm to the payments and lending industry.