More issuers are offering cash incentives to prospective customers, according to new data from direct mail tracking firm Mintel Comperemedia.
Through April this year, overall card incentives increased, Andrew Davidson, senior vice president at Mintel, said in an interview. According to Mintel's research, 59% of card offers during that period included some kind of additional incentive, such as cash or added miles or bonus points, just for signing up or for using the card for the first time. That is up from 48% of mailings during the same period in 2010 and 30% in 2007.
Cash incentives went from 1% of overall card offers during that period in 2007 to 7% last year and to 23% in the first four months this year. "No one wants to go over the 5% cash-back rate for rewards, but they're willing to offer consumers cash for signing up for cards," he said.
Offers of additional airline miles or other bonus points appeared in 25% of mailings through April, down from 38% during that period in 2010. But the greater focus now is on offering cash incentives, Davidson said.
Davidson singled out JPMorgan Chase & Co. for leading the charge with incentive offers overall, with the issuer offering $300 to open a the cash-back Chase Freedom card and 100,000 miles on its British Airways card. That is enough miles to cover two transatlantic flights and four domestic flights. It also is offering $100 to sign up for the Chase Slate credit card.
JPMorgan Chase did not comment by press time on its strategy for providing more incentives in its card offers.
Issuers are stepping up offers because the competition for credit card customers is increasing, with direct-mail offers increasing to 1.4 billion in the first quarter compared with only 826 million in the same period last year.
But all these offers potentially could work against issuers if they fail to create long-term customers.
"It's getting to the point that some of these offers are so good that consumers may take up the offer and sign up for the card just to get the incentive bonus regardless of ever using the card again," Davidson said.
