Credit-card industry executives always insist that they face strong competition. But the battle between the nation's largest card issuers appears to have intensified in recent months, and it shows no signs of waning.
At the moment, both Citigroup and Capital One Financial are aggressively seeking growth. Their efforts are putting pressure on other major card issuers such as Discover Financial Services and American Express.
Over the last several days, the sharp competitive dynamics were on display at an industry conference in New York.
"One of our philosophies at Capital One is when we see a growth opportunity, we really invest in it," Capital One Chief Executive Officer Richard Fairbank said during remarks at the Barclays Global Financial Services Conference.
The McLean, Va.-based firm reported 7% loan growth in its U.S. credit card business between the second quarter of 2014 and the same period this year, outpacing other card issuers.
"We think there's a pretty good window here. We're kind of all-in in exploiting it while it's there," Fairbank added.
More than most of its competitors, Capital One lends to consumers with subprime credit scores. And that market segment, which contracted rapidly during the recession, has been rebounding fast.
In the first quarter of this year, the number of new card accounts for borrowers with a credit score of less than 680 jumped by 28% from a year earlier, compared with 14% for the credit-card market as a whole, according to the American Bankers Association.
New York-based Citi, meanwhile, has set a high competitive bar with respect to customer rewards. The company's Double Cash card, which launched a year ago, gives consumers 2% cash back on all of their purchases. That offer has put pressure on other companies to sweeten their own offers.
Some analysts doubt whether card issuers will be able to sustain 2% cash-back offers over the long term. "I would say that the history is that it's a challenge to make it successful," said Christopher Donat, an analyst at Sandler O'Neill.
Citi spokeswoman Emily Collins said the performance of the Double Cash card is "in line with and exceeding" the company's expectations.
And there are other signs that Citi has become more aggressive. Earlier this year, the company agreed to issue co-branded cards for Costco Wholesale, which had been a longtime partner of American Express, after AmEx concluded that the deal's financial terms were unacceptable.
Then in July, Citi announced plans to spend more on marketing its U.S. credit-card business. Chief Financial Officer John Gerspach reiterated that strategy at the Barclays conference, acknowledging that the move will drive up expenses in the short term, and will take a longer period of time to increase revenue.
New York-based American Express has found itself on the defensive since losing the Costco deal, which accounted for about 8% of the company's worldwide billed business in 2014. On Friday, Chief Financial Officer Jeffrey Campbell acknowledged that generous rewards offers from competitors are putting pressure on the company's bottom line.
"Absolutely, particularly in the U.S. consumer environment, it is a competitive environment for rewards," Campbell said at the Barclays conference. "Our rewards costs have tended to grow a little faster than revenue, but we think manageably so."
Until recently, Riverwoods, Ill.-based Discover had been a card industry leader in loan growth, but has since lost that position.