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Issuers push no-frills cards

By Marcie Geffner ·
Tuesday, February 28, 2012
Posted: 11 am ET

If you received an offer for a plain-vanilla credit card late last year, you weren't alone.

That's because offers for plain-vanilla cards accounted for 30 percent of all the offers credit card companies mailed out in their efforts to acquire new customers in the fourth quarter of 2011, up from just 13 percent in the fourth quarter of 2010, according to Mintel Comperemedia, a direct marketing research company in Chicago.

The term "plain vanilla" refers to cards that don't have an annual fee or rewards.

Offers for such cards target people known as debt "revolvers," who typically carry a balance from month to month.

Frequently mailed offers include the Citi Simplicity card, Slate card from Chase and Capital One's Platinum MasterCard, according to Mintel Comperemedia Senior Vice President Andrew Davidson.

"Unlike plain-vanilla offers mailed pre-recession, today's plain-vanilla offers typically boast additional post-CARD Act features, so they're not just competing on rate. Citi's message is one of clarity and no late fees, whereas Chase's Blueprint feature helps customers manage their spending and borrowing. Capital One, on the other hand, is targeting consumers looking to re-establish their credit," Davidson said in a statement. The CARD Act refers to the Credit Card Accountability, Responsibility and Disclosure Act.

The Federal Reserve's intention to keep interest rates low until 2014 is fueling a competitive environment for plain-vanilla cards, Mintel Comperemedia suggested.

One indication of that is recent offers of credit cards with longer zero percent introductory rates on balance transfers. Mintel said that among such offers, 72 percent promoted an introductory period of at least 13 months and offers with a 15-, 18- or 21-month introductory period weren't uncommon in the fourth quarter of 2011. During the prior-year fourth quarter, only 58 percent of offers had zero percent introductory offers for balance transfers of such long duration.

Direct-mail offers for plain-vanilla cards declined during the 2008-09 recession and after the federal government imposed new regulations in the CARD Act. Now, however, plain-vanilla card offers are "back with a vengeance as issuers attempt to satisfy consumer appetite for credit," the company said.

Follow me on Twitter: @marciegeff

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