The increase in credit default and swelling rate of unemployment has caused banks and financial companies to slow down in their solicitations offering new credit cards to its customers and clients.
Marketing direct mail that offers credit cards has dropped dramatically by 71 percent, representing 391 million mails sent by card companies and issuers.
In a research conducted by Mintel Compremedia, which provides direct marketing strategy for businesses, it showed that there were 1.3 billion offers sent this same quarter last year.
Eighty 80 percent of the mails were sent to consumers with good credit scores, with 700 or above, in the third quarter of this year. People, who have low credit score, received no mail at all.
Compared to 2006 and 2007, 60 percent were sent to consumers with good credit history, while 40 to 50 percent of solicitation mails went to midlevel clients.
In the past years, about 2 billion to 3 billion mails were received by US households. As credit card business peaks in 2006, so did solicitation mails that were sent which reached to 5.76 billion.
Mailing is a traditional direct marketing strategy being used by banks and financial institutions to entice more customers to open a credit card account.
Credit companies are now modifying their business model to cope up with the economic crunch and perceived loss in earnings due to impending implementation of Credit Card Reform Act of 2009, which overhauls the credit system in the US.
Among the measures the banks and financial institutions have undertaken so far include, sending less solicitation mail and raising rates and fees on existing contracts as well as new card accounts.
Banks and financial institutions are now actively promoting prepaid debit cards and general purpose gift cards to expand its market.
The product caters to people who were rejected or disenfranchised by banks because they failed to meet the requirements.
The market of prepaid cards is wide. They are useful to people who want to manage their money properly.
On the other hand, payitgreen.org welcomed banks and card issuers' decision to reduce the use of paper for promotions and transactions.
According to this organization, advocating green environment, prepaid cards and all-electronic transaction systems decrease the use of papers for checks, bills and mails.
It further stated that if a 1000-employee company does not use paper for transactions and rely on electronic system, 889 square feet of forest would be conserved. Eliminating the printing of bills, checks and mails will also prevent 6,477 pounds of carbon dioxide emissions.