Carrying a strategy up north, U.S. credit card issuers have been deluging Canadian households with direct mail solicitations, according to BAIGlobal Inc., a research firm in Tarrytown, N.Y., that tracks mailings by credit card issuers.

U.S. and Canadian issuers sent a record 45.8 million credit card solicitations to Canadians during the first quarter, the company reported, and drew a lackluster response rate of 0.9%. In the United States during that quarter, U.S. issuers mailed 1.1 billion solicitations and got a 0.7% response rate.

Last year Americans got more than 3.5 billion credit card offers, and 0.6% of these mailings elicited a response.

Based on a study of 400 Canadian households, BAIGlobal found that 73% of the first-quarter solicitations came from U.S. monoline card companies, such as Capital One Financial Corp., MBNA Corp., and Providian Financial Corp. - the same issuers that tend to fill up Americans' mailboxes. Last year solicitations from monolines accounted for 65% of direct mail offers in Canada, BAIGlobal said.

"The monolines have been quite dominant for the last year or so," said Andrew Davidson, vice president of competitive tracking services at BAIGlobal. "The companies driving up direct mail in the U.S. are doing the same in Canada."

One big U.S. issuer missing among Canadian mailers was the First USA division of Bank One Corp. Last year Bank One sold its Canadian card business, estimated at $287 million of receivables, to Toronto-based Royal Bank of Canada. (The deal took place after Morgan Stanley Dean Witter & Co.'s agreement to buy Bank One's Canadian and U.K. card businesses fell through because of the potential violation of Visa International bylaws, which do not allow the Discover card issuer Morgan Stanley also to dispense Visa cards.)

Despite the record number of solicitations, Canadians still get fewer card offers per household than do Americans. BAIGlobal reported that in the fourth quarter mailed card solicitations averaged 4.7 per American household, more than twice as many as in Canada.

Mr. Davidson explained that in Canada cards have high market penetration: 98% of Canadian households own a credit card, compared with 76% of U.S. households.

Though Canada may look like a saturated market, opportunity remains for platinum cards there, he said. Only 7% of card owners in Canada carry a platinum card, compared with 28% in the United States. In the gold card market, however, there is approximate parity: 24% of Canadian cardholders have them, and 23% of U.S. cardholders do.

"The monolines are going in with their platinum offers, trying to get people to upgrade," Mr. Davidson said. "That's just the right marketing opportunity because if so many people already have a card, then the next thing to do is get them to upgrade, to use the card more, and to take out more credit."

He said that retail banks, which have been the traditional card issuers in Canada, are retaliating a little. "For many years, retail banks have been cross-selling credit cards through checking accounts, savings accounts, mortgages, etc., so they haven't had to rely on direct mail to the same extent as the monolines," Mr. Davidson said. "But we've been seeing some of the retail banks becoming more aggressive with their own mailings, and I think that will continue to be the case."

Mr. Davidson said that despite the low response rates most credit card accounts are still acquired through direct mail. Of those in the sample who said they had applied for a credit card in the past month, 68% said they had done so through the mail.

"It's still the main marketing channel," Mr. Davidson said. "And, generally, even though there's a low response, if you're a big mailer, you're going to pick up more of the applications."


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