Do you ever get the feeling that your mailbox is really just a recycling center for credit card offers? You’re not alone. Credit card companies will mail out approximately 2.5 billion card offers in 2010, up from 1.39 billion last year, according to Anuj Shahani, director of competitive tracking services for Synovate.
As direct mail offers rebound, they’re seeking a much different type of consumer than they did before the recession. Using a record number of teaser rates and record-high balance transfer fees, credit card issuers are all hunting the same small pool of people with great credit.
Read Balance Transfers are Back … With a Price.
“Yes, absolutely, we still are seeing an increase in overall mail solicitations,” Shahani says. “We had expected a big comeback this year.”
Gone are the days when people with average or bad credit receive an overwhelming number of offers. Instead, Shahani says, credit card companies are aggressively seeking prime and super-prime consumers. Before the crisis, people with credit scores of 760 and above received less than half of all credit card offers mailed. Now they receive fully two-thirds of all offers.
All that competition for a small number of people – most of whom probably don’t need new credit cards anyway – is leading to some incredible deals. A number of credit card companies are offering zero-percent interest for up to 36 months for new cardholders.
“The issuers really want you to sign up for a new card, and then use it,” Shahani says.
Issuers want new debt from squeaky-clean borrowers. But they’re less excited about taking on consumers’ old debts. That’s why most issuers are increasing their balance transfer fees, Shahani says. Many are charging 4 to 5% on balance transfers. Citi recently sent a test mailer with a super-high transfer fee of 7%.
“They’re charging high balance transfer fees because they don’t really want that old debt on their portfolios,” says Shahani. “They want very nice, clean folks who will pay off their card and not bring their old baggage.”
The number of direct mail solicitations is still far below its peak in 2005, when just over 6 billion pieces of mail were sent out by credit card companies. But it represents a big return from the doldrums of the recession. And direct mail remains the most popular way for credit card issuers to solicit new customers.
By contrast, about 20% of solicitations happen online, a rate that has stayed steady for the last three years.
“In 2004 or 2005, everybody thought online would be the future,” Shahani says. “But online has plateaued. Which gives us confidence to say that we expect direct mail to be the #1 channel” into the future.
Which means your mailbox is likely to remain a recycling center for credit card deals for years to come.
Read more on the effect of balance transfers and new credit on your credit score.
Image: Thomas Lillis IV, via Flickr.com
Christopher Maag Contributing writer for Credit.com, Chris graduated with honors from the Columbia University Graduate School of Journalism, and has reported for a number of publications including The New York Times, TIME magazine and Popular Mechanics. Reach Chris via email at chris@credit.com.
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