Credit card direct-mail solicitations from major issuers increased sharply during the first three months of this year, driven in part by a resurgence in rewards card and balance-transfer offers, according to new data Mintel Comperemedia released this month.
Issuers mailed 838 million card solicitations during the first quarter ended March 31, up 83% from 458 million during the same period a year earlier, as card issuers resumed marketing efforts following implementation of the Credit Card Accountability, Responsibility and Disclosure Act of 2009, the Chicago-based direct mail tracking firm says.
Though the first-quarter surge of solicitations suggests issuers are getting more aggressive in their marketing, the number of offers mailed to consumers so far this year is significantly lower than the levels seen before the recession, Andrew Davidson, Mintel senior vice president, tells PaymentsSources.
“Even though the first-quarter mailings showed significant growth, it’s still much lower than what we’ve seen in the past,” Davidson says, noting that from 2004 through 2007 issuers sent about 7 billion to 8 billion solicitations per year. “We expect to see a total of between 3 billion and 4 billion solicitations mailed this year.”
Issuers mailed 575 million card solicitations during last year’s fourth quarter, up 47.1% from 391 million the previous quarter, Mintel says. For 2009, issuers mailed 1.8 billion card solicitations, down 66.7% from 5.4 billion in 2008.
So far, the Credit CARD Act’s February 2010 implementation has not altered credit card products and marketing as drastically as some had feared, Davidson says.
“We are not seeing the wholesale shift to card offers with annual fees, as some suggested might happen, and we have not seen the demise of balance-transfer offers and teaser rates,” he says.
However, Mintel did see a noteworthy increase in mailings for fee-based premium cards during the first quarter, including cobranded travel rewards cards, Davidson says. And many large card issuers are restarting their marketing of promotional interest rates of 0% on balance-transfer offers, with balance-transfer fees averaging around 4% to 5% instead of 3% before the recession.
Rewards cards with no annual fee accounted for 57% of total solicitations during the the quarter compared with 48% during the same period two years ago, Davidson says. Premium rewards cards with annual fees accounted for 22% of total solicitations, up from 11%.
Cards targeting subprime borrowers, offering various fees and no rewards, accounted for 12% of total solicitations compared with 9% two years ago, and “plain vanilla” cards with no annual fee and no rewards accounted for 9% of all offers, down from 31% two years ago.
One possible reason solicitations for plain cards declined is that issuers previously targeted such products to subprime customers. “Subprime cards carrying all types of fees, beyond the annual fee, were hardest hit by the CARD Act rules, and that is the area where it is most difficult to make money,” Davidson says.
Last month, New York-based marketing research firm Synovate Mail Monitor reported that U.S. issuers sent 481.3 million solicitations by mail during the first quarter, up 29.2% from 372.4 million during the same period last year.