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

Shop around for a better credit card than this

In an effort to find new customers, banks are aiming to help with a big public concern: debt relief. TD Bank, located on the East Coast, hosted a free pizza night for potential customers. Citizens Bank has promised to give new customers $1,000 if they are saving for their children’s college fund. Bank of the Wichitas, in Oklahoma, is hitting the market hard with a new advertising campaign with “Where bankin’s funner!” as their slogan. Regardless of their geography, banks are looking for new customers and finding creative ways to reach out to a new market.

Since the Federal Reserve set an extremely low interest rate, banks are trying to work with the numbers. This explains why most banks offer bonuses , but with conditions. For example, Citizens Bank’s $1,000 college fund is available, but only if customers open a new account and deposit at least $25 per month. To qualify, families must have children younger than 6 and agree to contribute at least $25 every month until the child is 18. Another example is HSBC’s program to give away Amazon Kindles but only to customers who open a new account with $50,000 and agree to maintain a combined balance of $100,000 at the bank.

Small banks

To find good interest rates, some searching is required. First of all, smaller banks are now trying to compete with large banking centers. They are offering “rewards” checking accounts that often return 4 percent or more. Studies show that small banks often carry interest rates that are twice the national average. Gabriel Krajicek, CEO of BancVue.com, stated, “Most small banks have maintained the higher interest rate package for over a year, so their reliability is great.” BancVue.com is a web site that lists reward-running banking programs from around the country, at a community level. It’s a great tool for consumers to look for banks offering the best perks.

Online banks

For consumers looking for debt relief, searching online may also aid their financial positions. Online banks gained popularity a few years ago and managed to gain a strong market share almost immediately. Although online banks still have less than 4 percent of total retail deposits, their revenues have grown more than $160 billion since 2000. Part of the reason is their rates are normally better than brick-and-mortar banks. Online banks have smaller overhead costs and can pass the savings onto their customers. James Kelly, COO of ING Direct, the largest online-only bank, stated, “Despite the economy, we’re getting as much money as we need.”

The downside of online banking, however, is that most have limited online services. For extra accounts such as auto loans or credit lines, consumers still have to go elsewhere. Also, many online banks don’t have their own ATM networks, so getting charged a fee for using a debit card is inevitable. Check cashing can also be a hassle with banks that do their business solely online. Customers have to grapple with a traditional bank and explain their online status or mail the check to their online facility and wait for days, sometimes weeks, for their money.

Finding funds

In the end, debt relief is available to those to search hard for it. Fortunately in today’s computer age, there are web sites that do the work and research for consumers. Web sites like BancVue.com build their business on becoming a banking resource for their visitors. Consumers need to find tools like these and use them to maximize their savings.