US credit card mail offers decline in Q2 2008 as issuers continue to reel in offers to high risk households
11 August 2008
NEW YORK — Credit card mail volume declined again in 2nd quarter 2008 as issuers continue to cut back due to ongoing concerns about the economy. Quarterly mail volume was the lowest seen since 4th quarter 2003 according to Mail Monitor, the direct mail tracking service from global market research firm Synovate.
During Q2 2008, 1,060.0 million offers were received by US households, down 17% from the 1,274.7 million offers received during Q2 2007. Response rates were flat at 0.6%.
"Issuers that target subprime customers and those exposed by the mortgage meltdown continue to drive the decline," said Andrew Davidson, Vice President of Competitive Tracking Services for Synovate's Financial Services Group. As a result, low income and high risk households, already squeezed by the credit crunch, are receiving fewer offers for new cards. "Fifty-two percent of households with incomes under $50K received an offer in Q2 2008 compared to 66% in Q2 2007," said Davidson.
The card issuers that cut back solicitations the most were HSBC (-54%) and Citigroup (-45%). HSBC tend to focus more on subprime customers while Citibank continues to experience financial difficulties as a result of the credit crisis. Citibank's mail volume was the lowest quarter recorded in over 10 years.
For households receiving offers, the reductions to the Prime Rate have had a positive impact on the terms being promoted. The mean single / go-to APR declined from 12.91% in Q2 2007 to 11.36% in Q2 2008.
"Despite the recent cutbacks, one billion is still a huge number of solicitations," said Davidson. "Direct mail is still the number one method for acquiring new credit card customers," he added.
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Synovate Mail Monitor tracks credit card acquisition volumes and response rates throughout the US, and evaluates attitudes, behaviours, terms, and usage for each card in consumers' wallets. It is a service of Synovate's Financial Services Group, which generates consumer insights that drive competitive marketing solutions in the banking, investments, insurance and payments industries.
For more information on Mail Monitor visit www.synovate.com/mailmonitor.
About Synovate
Synovate generates insights to help clients drive competitive brand, product and customer experience strategies. Now part of Ipsos, with offices in over 80 countries, our approach combines best in class global research capabilities with personalised service, local knowledge and the flexibility to create teams and processes that meet clients' specific requirements. At Synovate, our clients sit at the top of our organisational chart, driving us to continually develop more innovative research solutions that predict actual business outcomes.
For more information on Synovate visit www.synovate.com.