Navy Federal Credit Union's move to eliminate balance transfer fees for new credit card accounts may demonstrate that the credit card industry has recovered sufficiently from economic and regulatory setbacks to return to more aggressive marketing.

The nation's largest credit union in terms of receivables is kicking off what may be a fresh push for more issuers to slash such fees after they had crept up to as high as 5% last year.

The new policy was announced Tuesday.

Navy Federal, of Vienna, Va., is not the first issuer to remove balance transfer fees this year, said Andrew Davidson, senior vice president of Mintel Comperemedia in New York.

"A few issuers this year have eliminated balance transfer fees, which indicates that competition is beginning to heat up as issuers look for something they can do to set their offers apart and stand out in the crowd," Davidson said.

Some issuers last year raised balance transfer fees in the wake of the Credit Card Accountability, Responsibility and Disclosure Act, Davidson said. One reason was that the CARD Act requires issuers to apply payments first to balances with the highest interest rates, which forced certain issuers to alter their payment allocation processes.

"Initially after the CARD Act went into effect last year, we saw some issuers increasing the fees on balance transfers to offset the effects of the new payment allocation rules," Davidson said. "But [as of earlier this year] balance transfer fees have been coming down again."

The average fee on introductory balance transfer offers during the fourth quarter of 2010 was 3.06% of the total balance, up from 2.75% a year earlier, according to Mintel data.

Issuers sharply curtailed credit card direct-mail offers and promotions in 2009 because of the recession, and the introduction of the CARD Act further dampened marketing activity, Mintel data shows.

Some issuers also are offering below-average annual percentage rates on cards and are extending the duration of low promotional interest rates, Davidson said. Navy Federal's limited-time offer is for a 12-month, 0% annual percentage rate credit card.

During the final three months of 2010, 58% of introductory balance transfer offers touted a promotional annual percentage rate of 0% that was set for at least 13 months, compared with 20% of such offers that were available a year earlier, Mintel data shows. Davidson said Mintel more recently has observed credit card offers touting introductory rates that last 24 to 30 months.

"There is clearly an opportunity to push longer durations in the current environment," he said, adding that issuers "will continue to experiment with promotional offers that help set them apart in a cluttered mailbox."

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