Tuesday, Feb. 2
Posted: 8 a.m.
For the first time in three years, credit card direct mail volume made a quarterly increase, according to new research from Mintel Comperemedia, a direct mail tracking service. Direct mail volume rose 47 percent in the fourth quarter of 2009 compared with the previous quarter. The total number of card offers sent for the year was still 66 percent lower than the total for 2008.
The flurry of credit card offers sent in the last quarter of 2009 exhibited higher interest rates on variable-rate cards. The mean APR for purchases was 13.95 percent, compared with the average rate of 11.80 percent during the fourth quarter of 2008. (You can track the average credit card interest rates each week by reading the credit card section of the Interest Rate Roundup.)
Annual fees, the fee rumored to become more prevalent as a result of credit card reform, appeared with more frequency in 2009 over the previous year. In 2009, 36 percent of credit card solicitations had an annual fee. Only 20 percent of offers sent in 2008 featured an annual fee.
On the flip side, consumers can find plenty of credit cards that don't charge an annual fee. In the third quarter of 2009, 61 percent of credit card offers had a rewards program and no annual fee, according to a recent Mintel Comperemedia webinar.
While more card offers went out near the close of 2009, folks with bad credit were evidently not the targeted audience. Card originations for those with subprime and "deep-subprime" VantageScore credit ratings -- scores at 700 or below on the VantageScore scale -- were down 63 percent from second quarter 2008 levels, according to a Q3 2009 Market Intelligence Report from Experian and Oliver Wyman.
Less demand for new credit from the poor-credit crowd partly drove the slump in new card approvals, but a "flight to quality" by lenders also was a factor.
"Certainly we're seeing that score cutoffs are going up overall, because if you look at just the average score of people who are being approved, it's gone up," says Charles Chung, senior vice president and general manager of decision sciences at Experian, one of the three major credit reporting agencies.
Score cutoffs and underwriting criteria always vary by issuer, but a poor credit score can make it difficult to get an unsecured credit card.
Mobile banking growingThis post was written by Ellen Cannon.
Mobile banking is probably the hottest trend in consumer banking. All of the largest U.S. banks offer ways for customers to monitor bank accounts, pay bills, transfer money and find the closest ATM.
The largest banks -- including Bank of America, Chase, Citi, WellsFargo -- all have free iPhone apps. As a matter of fact, all of the mobile banking applications are free (except where the wireless provider charges messaging or data fees).
Citi has recently released the Citi Mobile application for the iPhone for credit card holders. Citi has offered mobile banking to its retail customers for the past year, but this new application allows Citi credit cardholders to see account balances, transactions and track rewards. The app does not allow cardholders to pay their credit card bill -- although if you're also a Citi banking customer, you can do that through Citi Mobile.
All of these efforts are to help customers bank more efficiently. A number of credit card issuers are offering similar alerts. I'm wondering if you find them useful. Do you like getting an alert when your bill is due or when you're close to your credit limit? Do you think mobile banking will become as common as online bill pay?
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