Card companies to consumers: We're baaack!
One sign of the banks' optimism is that credit card direct-mail solicitations are on the rise again.
The junk mail is back.
Mintel Comperemedia, a provider of direct-marketing information, reports that in the fourth quarter -- for the first time in three years -- the volume of credit card direct mail increased from the previous quarter.
With a 47% increase in direct mail compared with the third quarter, credit card issuers showed increased confidence in the economy and a willingness to extend more consumer credit.
However, last year's direct-mail volume still pales in comparison with recent years. Mintel reports that the total number of credit card offers sent in 2009 fell 66% behind the number sent in 2008. Pre-recession (2004-2007) card mailings topped 7 billion annually; last year, they didn't even reach 2 billion.
"Credit card direct-mail volume leveled out mid-last year and finally, in the last quarter of 2009, we saw the long-awaited increase in card offers for consumers," said Mintel Comperemedia senior vice president Andrew Davidson. "More direct marketing is an excellent sign for the economy, because it shows issuers gaining confidence and taking a more positive outlook towards gaining new cardholders and reducing delinquencies."
This month is significant for credit card companies, as another wave of CARD Act regulations takes hold on Feb. 22. In anticipation of tighter restrictions on credit practices, many companies are trying to rebalance their portfolios.
"In this post-recessionary environment, card issuers need to offset potential lost revenue from CARD Act regulations. We see more cards being promoted with annual fees and high purchase APRs," Davidson said.
According to Mintel, more than a third of credit card offers sent in 2009 (36%) featured an annual fee, compared with just one in five in 2008. Purchase rates are also on the rise, despite the steadily low prime rate.
On variable-rate card offers sent during the final three months of 2009, the mean go-to APR for purchases was 13.95%, versus the average of 11.8% observed a year earlier.
Many top credit card issuers increased direct-mail volume during the fourth quarter of last year, but the biggest bumps compared with the same period of 2008 came from Chase (up 87%) and U.S. Bank (up 64%).
Heavy volume or not, some consumers don't like it.
Greg of Agoura, Calif., was succinct when he wrote to ConsumerAffairs.com about Chase Bank: "Direct solicitation to a 12-year-old for a credit card."
From Papillion, Neb., Ben told of what he called a "humiliating experience" with American Express. He said he read on the bottom of the mail solicitation with the fake credit card that he can stop receiving offers by calling a toll-free number to opt out. "So I call the number and the prerecorded person asks: your name, your address, your birth date, and then your Social Security number if you want to be free from solicitations for the next three years. I'm so fed up with getting this solicitation every month so I gave them the information. But after I hung up I felt like that's unbelievable that I have to give out that kind of information just to be left alone from these vultures."
If you'd like to see fewer of these offers showing up in your mailbox, here are some tips for getting your name removed from mailing lists.
Related reading at ConsumerAffairs.com:
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