Credit Card Mailings Hit All-Time High; Response Rates Plumb Record Low

19 March 2001

US consumers received more credit card mailshots in 2000 than ever before while response rates hit an all-time low, according to New York-based market research firm BAIGlobal.

The study found that 3.54 billion solicitations were mailed by credit card issuers last year, up from 2.87bn in 1999. But only 0.6% of recipient households responded, down from 1% the year before.

Andrew Davidson, president of BAIGlobal’s competitive tracking services, opined that the increase in volumes had helped cause the drop in response. With 75% of households owning a general-purpose credit card, consumers have grown accustomed to card companies’ tactics – such as offering a low initial interest rate – and are not taking the bait. “Going forward, issuers really need to break through the clutter and offer something compelling to get a response,” he urged.

The rise in mailings reflected a revival in offers for ‘gold’ cards and more aggressive marketing campaigns from issuers like Providian and Capital One Financial Corporation. In addition, there was also a rise in cards with web-oriented features, such as American Express brand Blue.

Around 25% of mailings offered annual percentage rates of over 19%, reflecting a growing trend whereby issuers target the so-called “sub-prime market” – consumers with little or no credit rating – in a bid to attract new customers.

What is more, the internet is slowly becoming more popular as a way of attracting new customers. The number of applications for cards made online rose from 2% in 1999 to 5%.

News source: Wall Street Journal