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Credit Card eZine - News and Articles about Credit Cards

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Credit Card Direct Mail

Monday, February 11, 2008

The volume of credit card mailings declined in the fourth quarter 2007, according to Mail Monitor. A 14% decline was no surprise in view of the mortgage crisis, and a slow economy. Lenders, who tend to aggressively advertise their credit products, seem to pull back.

To put it mildly, lenders are good at marketing. Roughly speaking, they're marketing giants, as successful advertising campaigns almost determine their income. Credit card direct mail is one of the sources of appealing new customers for the products and services, and informing existent ones about current credit programs and campaigns.

Though some customers get irritated seeing piles of pre-approved credit card offers, direct mailings are extremely effective when it comes to credit card promotion. Like it or not, credit card direct mailings work perfectly well, especially when it comes to bad credit cardholders. Thrilled by the chance to get a plastic, they rush to fill the first application form within their reach.

Interestingly, lenders cut the volume of credit card mailings mostly for subprime customers in order to prevent further losses associated with subprime customers. Let's take a closer look at the figures! The total loss of the mail volume in the fourth quarter is 14% in comparison with the same period in 2006.

Major credit issuers cut their credit card mailings sharply. During the fourth quarter 2007, about 1.3 million credit card offers were received by customers compared with 1.5 million offers during the fourth quarter 2006.

A 14% decrease shows that creditors change their strategy. They become more particular when it comes to their clients. Besides, most lenders are bearing huge losses because of credit card defaults, that's why they want to limit their exposure to further losses.

It's worth mentioning that companies that cut their solicitations the most, happen to be the ones that had experienced a great deal of financial difficulties after the subprime mortgage meltdown. Citibank and Discover bore enormous losses after the subprime mortgage crisis.

Oddly enough, Chase made the effort to make the most of this situation and while other lenders cut back their solicitations, Chase increased its mailing volume by 62%. This way, Chase had better financial results than other issuers. It is estimated that 1 in 4 credit card offers in the mailbox come from Chase bank. Meaning, a regular customer is likely to apply for more Chase credit cards.

The uncertainty in the economy makes lenders more selective about their potential clients. Although the Fed Reserve cut the prime rate significantly, credit card issuers tighten credit card application requirements, and it means that the number of credit card applicants will decrease in the nearest future.

However, good credit cardholders have nothing to worry about, as they become the most wished-for credit applicants. So, creditors will make more credit offers to their existent and reliable clients, and reduce the amount of customers exposed to the problems with their debt repaying.

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