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Mintel Comperemedia tracks new credit card direct mail communications as issuers strive for profitability
Chicago (December 23, 2008)-Don't toss that letter from your credit card company quite yet. Mintel Comperemedia, a service that provides direct marketing competitive intelligence, reports that many credit card issuers are communicating big changes in account terms, conditions and fees to their clients through direct mail.
"In recent months, we've seen many marketing direct mail pieces inform cardholders of new, notable changes to their accounts," says Stephen Clifford, VP of Financial Services for Mintel Comperemedia. "With no clear end in sight for the recession and other economic troubles, many companies are altering the terms of their products and services so they can stay profitable, protect their assets and reduce their risks."
Mintel Comperemedia has seen some credit card issuers use direct marketing to inform cardholders that their accounts have been closed due to inactivity. Closing accounts that aren't being used can benefit card issuers by reducing their total risk.
Another way credit card issuers reduce risk is by decreasing credit lines on active cards. In a mailing that communicates such a decrease, Citibank lowered a cardholder's credit line based on spending history and the fact that he or she was "only using a small portion of the available credit." Stephen Clifford notes that "tightening someone's credit line can be a double-edged sword for both issuer and cardholder. It reduces the risk that the cardholder will take on too much debt, but it also decreases that person's total purchasing power."
Leading credit card companies are also adjusting fees and interest rates on existing accounts to improve profitability during difficult times. Mintel Comperemedia saw both Chase and Capital One Bank, for example, send letters to cardholders about increased fees and new fee-calculation methods. Other issuers, including Bank of America, Discover, Wells Fargo and GE Money Bank, have used direct marketing to alert customers to changes in their cards' interest rates.
Announced late last week, the Federal Reserve approved new rules that will prohibit credit card companies from raising interest rates on existing balances unless a payment is more than 30 days late. But those changes won't go into effect until July 2010. Stephen Clifford expects card issuers to actively adjust rates and fees throughout 2009 in anticipation of the new regulations. "We'll see continued marketing direct mail communication of new account terms and conditions during 2009. We may even see issuers scale back on benefits and perks like rewards programs."
Mintel Comperemedia provides competitive intelligence for businesses looking to advance and improve their direct marketing strategy. Tracking direct marketing (including mail, email and print advertising) targeted at consumers, small businesses and insurance agents, Mintel Comperemedia offers a unique perspective on everything from banking trends to insurance trends to credit card statistics. For more than 38 years, Mintel has provided insight into key worldwide trends, leading the industry for consumer, product and media intelligence.
Joanna Peot
Public Relations Executive
312-628-7946
jpeot@mintel.com