Credit Card Solicitations Are Increasing
Citigroup mailed 346 million pre-approved credit card offers in third quarter 2011, according to Mail Monitor, a unit of research firm Synovate. This is more than the population of the U.S., which is currently 310.6 million. According to FICO, 200 million adults have enough credit information to generate a credit score. Obviously, consumers are receiving more than one offer, since not all 200 million have credit scores that would qualify them for the credit card. In addition, Citigroup is also being more selective credit-wise of who receives the offer, which is usually the segment that doesn’t need any additional credit.
According to Synovate, credit card issuers are beginning to increase their solicitations after hitting their lowest volume in 2009 – the lowest in 17 years. The proportion of households receiving the mailings has decreased and the credit qualifications have changed drastically, only those with good to excellent credit are receiving the offers. In 2011, 59% of households are receiving at least one credit card solicitation mailing a month, which is below the 10-year high of 75% and decade average of 65%.
The statistics indicate that credit card debt has gone down and consumers are charging less and paying down debt. Yet Citigroup is trying to obtain more customers and encouraging usage of their card. Citigroup has now surpassed Chase in the number of mailings.
This may be Citigroup’s attempt to appeal to the debit cardholders that have recently been charged fees for using their cards. This resulted from the Durbin Amendment to the Dodd-Frank Act effective Oct. 1, which limits the fees large banks can collect from merchants when a debit card is swiped. As a result, to make up for revenue losses, some banks are charging fees to their customers for using their debit cards.
Citigroup is making their credit card offer very attractive with 0% balance transfers, no annual fees, no late charges and no penalty rates for 18 months. It will be interesting to see how many consumers sign up for Citigroup’s card. If you receive one of their offers, what will you do? If you don’t need credit, you shouldn’t consider it. If you have cards with high interest rates and you can pay off your bills in the 18 month time frame, it might be worth considering, but you need to read the fine print.
If you don’t want to receive pre-approved credit card offers, you can stop receiving them by a process called “opt out. To opt out, call 1-888-5-OPT-OUT (1-888-567-8688) or go to the website at www.optoutprescreen.com. You can opt out for five years or permanently.
Credit Expert, John Ulzheimer, is the President of Consumer Education at SmartCredit.com, the credit blogger for Mint.com, and a Contributor for the National Foundation for Credit Counseling. He is an expert on credit reporting, credit scoring and identity theft. Formerly of FICO, Equifax and Credit.com, John is the only recognized credit expert who actually comes from the credit industry. Follow him on Twitter here.