Recovery Watch: Credit card mail has increased dramatically

A stack of credit card mail offers, with diagrams that highlight the major card issuers and the three major credit bureaus.

Credit card mail offers are coming in great volume lately, according to a Mintel Comeremedia study. (Photo Credit: CC BY-ND/Paul White/Whitesites Blog)

Most people find a mailbox filled with credit card offers unappealing, but look at the bright side: It’s a sign that the squeeze on consumer credit may be loosening. Bankrate reports that the consumer credit industry has experienced a kind of renaissance when it comes to credit card mail offers. The Mintel Comperemedia study found that offers for new credit cards skyrocketed from 551 million in the fourth quarter of 2009 to 1.4 billion in the final quarter of 2010.

How credit card offers stand out in the crowd

In order to attract consumer business, more credit card offers are trumpeting no balance transfer fees, no foreign transaction fees and extended low introductory rates. Waiving balance transfer fees is particularly popular. Senior Vice President Andrew Davidson of Mintel told CreditCards.com that banks will do almost anything to grab the competitive advantage. According to a recent Bankrate study, 15 bank credit cards and 25 credit union credit cards eschew balance transfer fees. For banks that did charge interest on balance transfer fees in 2010’s fourth quarter, the mean rate was 3.06 percent.

Working to be your intercontinental champion

Another area where credit card issuers compete for business is the foreign transaction (aka currency conversion fee) arena. While not as visible as APR, annual fees and balance transfer fees, foreign transaction fees are important to anyone who travels, whether for pleasure or business. Most cards add a 3 percent surcharge for each foreign transaction, a tax that can add up quickly. More than 90 percent of bank cards and nearly 60 percent of credit union cards hit travelers with this fee, according to a Pew Trusts study conducted in July 2010.

Chase, Citibank, HSBC and others currently waive foreign transaction fees on many of their cards, said Mintel.

Consumers like extended introductory rates

Perhaps the most hotly contested area in the credit card mail wars is the extended introductory rate. A low initial APR for balance transfers and purchases is appealing to consumers, and some credit card issuers even dangle a zero-percent APR.

The teaser rate offered by credit card typically exceeded 13 months in the fourth quarter of 2010, reports Mintel. However, that number is trending higher, says Davidson.

“The squeeze on credit observed during mid-2009 is being reversed, and many issuers are now offering durations of 15, 17 or 18 months or more,” he told Bankrate. “We have even seen offers with 24- and 30-month intro rate durations in recent months.”

Credit card legislation has kept interest rates down

The Credit Card Accountability, Responsibility and Disclosure Act (CARD) has helped stabilize credit card APRs. The mean for 2010’s fourth quarter was 14.03 percent, according to Mintel. Many credit card companies have contrasted their APRs against the relatively high prime rate as a consumer draw, said Davidson.

Sources

Bankrate

CreditCards.com

Pew Trusts

WhiteHouse.gov

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