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2008-08-21 06:19:47

Credit Card Mail Offers Decline Again

The volume of credit card direct mailings sent to customers continues to fall, according to the latest research held by Mintel Compremedia. To be more exact, the amount of direct mail fell 8% from the first quarter 2008.

It's worth saying that there has been a steady decline of direct mail volume since the third quarter of 2007 when it amounted to 1.86 billion. Now, the total volume of unsolicited offers sent to cardholders is 1.54 billion, i.e. a 17% decline since 2007.

Probably, some customers would like to stop getting annoying unsolicited plastic money offers. Weird as it may sound but direct mail is one of the most effective marketing tools as it provides the way to find out more information about new credit programs and new deals on offer. For companies, it's a number one method of obtaining new customers.

Experts share the opinion that this decline is nothing but a symptom of the credit crisis, plus ongoing concerns about the weak US economy. Issuers are becoming more and more cautious when targeting their potential clients.

Cardholders receive fewer offers from lenders, especially those whose credit score is low - 52% of such households received direct mailings in the second quarter 2008 compared to 66% in the same period last year.

Figures speak for themselves. Companies cut back the amount of credit card mailings due to rising delinquencies which result in tough conditions for both issuers and customers. No wonder that people whose credit rating is far from ideal see fewer deals available for them. And that's how credit squeeze hits customers, especially those who struggle to get access to plastics due to their poor payment histories.

But it's also worth mentioning that those households who still receive unsolicited offers by mail have better terms compared with the offers last year. This can be explained by the prime rate reduction which has had a positive impact on interest rates.

The point is card issuers have become extra careful when it comes to approving potential applicants. Even major companies are bearing record losses. That's why the volume of direct mail continues to decline steadily.

Speaking of the lenders that cut back most solicitations, it's worth mentioning here HSBC and Citi. Citibank experiences certain financial difficulties and HSBC mainly focuses on borrowers with less than perfect histories. Meantime, Capital One and Chase maintain the total volume of credit direct mail. Discover also cut the number of unsolicited mail by 18%.

Although most lenders have cut the amount of the direct mail it doesn't mean that people with good score rating will also have difficulties. Just the other way round, now customers with high scores are in great demand, so issuers will obviously continue to compete for solvent clients.

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