Three large credit card issuers poured promotions into consumers’ mailboxes during last year’s fourth quarter, continuing the post-recession resurgence of direct-mail credit card offers that began in late 2009, according to new data from Mintel Comperemedia.
JPMorgan Chase & Co., Citigroup Inc. and American Express Co. accounted for more than half of all mailed offers during the quarter, Andrew Davidson, the New York-based research company’s senior vice president, tells PaymentsSource.
Issuers mailed 1.4 billion card offers to consumers during the quarter, up 154% from 551 million during the same period in 2009, Mintel reports. That figure compares with 1.2 billion offers mailed during the third quarter of 2010, which was up 207% from 391 million a year earlier (
Though the growth rate for direct-mail card offers slowed at the end of last year, mailings are “quite strong and likely to increase for the next few quarters,” Davidson says. “The fact that the bulk of direct-mail offers are coming from just three issuers suggests there is a lot of slack to be taken up by other issuers that have laid off on heavy direct mailings in recent quarters.”
Capital One Financial Corp. and Bank of America Corp. are among the issuers that might increase card-offer mailings this year because they previously accounted for a heavier share of total direct-mail offers, Davidson says.
“Competition is increasing again among issuers following the recession and the introduction of new card regulations last year, and we are starting to see the result in more direct-mailed offers touting unique features,” Davidson says.
The recession caused issuers to dramatically pull back in 2009 on direct-mail card offers, which reached 1.7 million mailed offers in the fourth quarter of 2007, according to Mintel. Subsequently, the Credit Card Accountability, Responsibility and Disclosure Act, which went fully into effect in 2010 and restricted issuers’ ability to charge certain penalty fees and to change cardholders’ interest rates except in certain cases, caused issuers to “react en masse” by reducing and simplifying direct-mail offers, he adds.
The opportunity now exists for certain issuers seeking a competitive advantage to buck the status quo by touting card products’ specific perks in direct-mail offers, Davidson notes.
“While a lot of issuers are promoting the routine offer of late fees of up to $35, some issuers are recognizing the power of touting an offer of no late fees, while others are dropping foreign-transaction fees on certain credit cards in order to get attention,” Davidson says.
Citi and HSBC most recently waived foreign transaction fees on some of their credit cards, a strategy Chase is also pursuing (
“A growing number of issuers targeting upscale cardholders who are likely to travel are dropping their foreign-transaction fee, but this is still a niche area and it’s a perk other issuers can exploit,” Davidson says.
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