Credit Card Offers Making Comeback?
Credit Card Offers Returning
Unless you have the most glittering of credit scores, it’s unlikely that you have received many credit card offers through the mail for some time, at least until recently. But that could be changing.
That’s because credit card companies are slowly recognizing that it’s going to be tough making money in their industry unless they issue some, er, credit cards.
Credit Cards and Credit Risk
Of course, even credit card companies aren’t dumb enough to go back to their old business model, which appeared to revolve around the exciting strategy of lending seemingly limitless amounts of money to people who were distinguished solely by their patent inability to repay the debt. Would they?
Surely now they’re starting to explore the novel concept of lending only to consumers who stand some chance of settling their obligations. You know, people with good credit scores.
Nope. According to Mail Monitor from Synovate, a specialist market research company, U.S. households received a total of 398.5 million credit card offers in the last quarter of 2009, 46 percent more than during the previous three months. And the company press release says:
An increase in mailings to the subprime market was responsible, to a great extent, for the increase in the mail volume in the latest quarter. The subprime segment had experienced incredible credit tightening following the recession and initial passage of the CARD Act. However, issuers like Capital One have stepped up to mail to this segment once again.
Meanwhile, the Detroit Free Press quoted Mark Zandi, Moody’s chief economist, earlier this week, saying that he was “…seeing early signs that credit card lenders are easing up a bit on underwriting standards.”
Credit Card Rates to Cover Poor Risk Management?
The Synovate report goes on to imply that perhaps card issuers may be covering the risks associated with subprime lending by hiking credit card rates still further. It pointed out that the average purchase APR for offers mailed in the fourth quarter of 2009 was 13.51 percent, which is the highest for at least five years.
Another unwelcome development for consumers was an increase in the number of credit cards being offered with annual fees. These made up 35 percent of all offers mailed, the highest proportion in a decade. The press release continued “Mail Monitor anticipates both APRs and the proportion of offers with an annual fee to continue to rise in 2010.”
Credit Card Applications Still Not Foregone Conclusions
It would be a mistake to think that the process of loosening lending policies has yet reached the point at which every credit card application will succeed. On the contrary, some card issuers are still enforcing tough criteria that make it difficult for the less creditworthy to add to their plastic.
However, the trend toward easier credit does seem to be established. So perhaps now is the time for you to review your existing credit card deals, and see if there aren’t better alternatives out there.
Disclaimer:The information in this article is believed to be accurate as of the date it was written. Please keep in mind that credit card offers change frequently. Therefore, we cannot guarantee the accuracy of the information in this article. Reasonable efforts are made to maintain accurate information. See the online credit card application for full terms and conditions on offers and rewards. Please verify all terms and conditions of any credit card prior to applying.
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