Teaser offers are becoming increasingly trendy among bank card issuers that hope to lure new accounts with special low rates that ratchet up after a few months.
"The use of introductory rates is an important new development in the industry," said Robert Skolnick, executive vice president of BAI Mail Monitor, a Tarrytown, N.Y., firm that tracks direct-mail marketing solicitations.
Mr. Skolnick said he has not completed the statistical analysis for his second-quarter mailings report. But he said that a "significant" proportion of offers now include an introductory rate.
The researcher likened the trend to the rise of no-annual-fee offers a few years ago. But he said he has not yet evaluated the effectiveness of the new tactic.
Impact Questioned
"The question is out, in our mind, as to what effect it is having in driving up response rates," he said. "We have not seen rates have anywhere near the impact of fee [waivers] in the past.
The advent of introductory rates makes sense, though, because "consumers are looking beyond [the fee] to other forms of value," Mr. Skolnick said. Rebate offers have also gained in popularity, he pointed out.
Most of the introductory offerings involve a single-digit rate that is good for a year or less. After the introductory period, a floating rate over. prime or a higher fixed rate takes effect.
One such offer, from NationsBank, entails a rate of 6% through the end of the year. A variable rate of prime plus 9.9% - or 15.9% - takes effect in January. The card is free, provided it is used during the year. Otherwise the annual fee is $35 for a gold card and $18 for the classic version.
A few banks, such as Signet Banking Corp., Banc One Corp., and Rocky Mountain BankCard System, have made highly publicized offers to waive finance charges altogether for the rest of this year for some customers. But Mr. Skolnick said these offers are still rare.
Mr. Skolnick said his report won't be available for a few weeks, but it is already clear that competition among banks is intensifying.
"The solicitation levels were enormous," he said. "They're not only up significantly over last year, but are among the highest in five years."
In addition to the introductory rates, there continues to be a significant volume of no-fee offers in Mr. Skolnick's sample.
