Credit Card Mailings and Responses

BAI Global has provided an eleven-year record of the increases in mail solicitations for credit cards and the declining rates of response to those mailings. Last year card issuers mailed over 3.5 billion solicitations, a new record. Response rates also set a new record (low) at 0.6%. According to the summary in Research ALERT, the drop in the response rates is attributed in large part to the fact that three-quarters of U.S. households already have one or more credit cards. There must be some limit to how many cards are enough. Currently, the average number of cards per household is about 2.4 cards. In spite of this level of saturation, "a typical household receives more than three credit card offers per month throughout the year." A second factor depressing the response rate is mailbox clutter." We receive so much "junk mail" each day that it is hard to identify which envelopes are worth opening. In an effort to gain new cardholders, card issuers are "upgrading" their offers to gold and platinum cards. Whereas only four percent of offers in 1999 were for gold cards, a fifth of the offers in 2000 were for gold cards. More than half of the solicitations were for platinum cards. At the same time that the industry was upgrading the metallic images of their cards, they were downgrading the credit quality of the cardholders that they were soliciting. One-fourth of all solicitations in 2000 were for cards bearing rates higher than 19 percent.

Nonetheless, direct-mail solicitations are still the dominant source of new credit card accounts. BAI Global reports that last year 68 percent of new accounts were acquired by direct mail vs. only five percent from online applications. However, online applications accounted for only two percent of total applications in 1999. Other sources of new credit card customers were phone calls, seven percent; brochures in restaurants and banks, nine percent; and other mail.

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