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Credit Card Applications » News » Other » Direct mail credit card offers on the rise, says study

Direct mail credit card offers on the rise, says study

April 10, 2010
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Direct mail credit card offers have started to recover as consumers become more financially stable and resume credit card activity, international market research firm Synovate said in a study.

According to the report, there have been 398.5 million credit card offers mailed to US households in the fourth quarter of 2009, reflecting a 46 percent increase over the previous quarter.

However, the output remains tepid compared to the 668.1 million offers mailed in late 2008.

Synovate stressed that as the US economy rebounds, even at a slow pace, the company expects more available credit to consumers, although at a higher price. In addition, Synovate is confident that credit card companies are poised for a comeback with innovation at the forefront of its comeback.

Synovate however sees the upcoming implementation of the Credit Card Act as a possible drawback to an already recovering market. It said the legislation has caused major anxiety to both businesses and consumers.

Synovate added the timing of the implementation of the act was "questionable" because it was given at a time when the US was still experiencing financial difficulties and not prepared to face "additional headwinds."

Since the passage of the Credit Card Act, issuers have redesigned their offerings and businesses to address the changes mandated by the new law, which takes into effect on Feb. 22. This reconfiguration caused a decline in new credit card mailings.

A big factor in the volume increase in direct credit card mailings was the rise in correspondences to the subprime market. After experiencing credit tightening as a result of the recession and the initial passage of the CARD Act, more issuers are starting to target this market again.

This resulted in a dramatic increase in mail volume, but came at a price. Average purchase APR for the fourth quarter of 2009 was pegged at 13.51 percent, the highest in five years according to Synovate. In addition 35 percent of the direct mail offers in the fourth quarter of 2009 carried an annual fee that Synovate said was the highest share recorded for the past 10 years.

A similar report from Mintel Comperemedia also revealed a 47 percent increase in direct mail credit card offers from the third quarter to fourth quarter of 2009. It said this was due to consumers' resumption of spending and willingness to utilize credit. Because of these, they stressed that business should take advantage of this by enhancing its merchant services with credit card processing.

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