Credit Card Mail Rebound on Deck

DIRECT MAIL CREDIT CARD OFFERS ARE EXPECTED TO REBOUND SLIGHTLY THIS YEAR as banks and other issuers evaluate recent legislation and figure out how to continue to mail profitably, says Anuj Shahani, director of competitive tracking services for Synovate’s financial services group.

The legislation in question is the Credit Card Accountability Responsibility and Disclosure (CARD) Act of 2009, which took effect in February. Under the act, credit card companies can no longer:

• Raise interest rates on existing balances.

• Raise rates if card holders fail to make timely payment to other creditors.

• Issue cards to minors without adult co-signers, unless they show means to repay the debts.

• Fail to disclose how long it would take to pay off balances at the monthly minimum rate.

“The card issuers had pretty much gone on pause mode and were just waiting to figure out what the new rules of the game were going to be before they went ahead and mailed,” Shahani says. “Now that we know what the CARD Act is, and what are the restrictions involved, we’re actually anticipating that mail volume will go up this year.”

During the fourth quarter, U.S. households received 398.5 million credit card offers, a 46% increase from the 272.5 million offers sent in the previous quarter. But those figures are dwarfed by the 668.1 million offers mailed during the same time a year ago, says market research firm Synovate.

“We’re expecting it to come back not as high as we were seeing in the easy credit days, definitely — we don’t think we’ll ever see those days again,” Shahani cautions. “But we definitely expect mail volume to be slightly higher than last year.

“As the economy recovers, even at a modest pace, we expect credit to become available to consumers, albeit at a higher price,” he notes. “The CARD Act has clamped down on many revenue streams for issuers, and some of this lost revenue is going to be made up by increasing annual fees or introducing new fees on credit cards.

“We do track the other channels, but so far direct mail is still holding up strong,” he says. “Even through the recession, even as direct mail dropped, so did the other channels used to extend credit,” he says.