Credit card offers multiplying again

more credit card offers in the mail these daysIf you feel like you've been getting a lot of mail lately encouraging you to open a credit card, it's not your imagination. Banks have been ramping up the number of offerings they're sending to your mailboxes.

According to market research firm Synovate, credit card issuers sent 481.3 million offers to American consumers in the first quarter of 2010, up a whopping 77% from just half a year ago. About half this large number came from only two issuers, Capital One and Chase. Why are issuers suddenly being so aggressive in their search for new customers?

The biggest reason is that consumers are spending again, and the card companies want a piece of that pie. "We've seen a significant increase [in offers]," says Andrew Davidson, senior vice president of Comperemedia, a division of market research firm Mintel. "What we're witnessing here is a more cautiously optimistic approach."

Crucial numbers like delinquencies and unemployment numbers are heading down, and the stock market is heading back up after last week's hiccup, all factors that give the issuers confidence, Davidson says, and adds that Mintel expects the total number of credit card solicitations to total between 3 billion and 4 billion this year. While this sounds like a lot, it pales in comparison to the number of offers that were mailed during the boom a few years ago.

"New credit card regulations are having an impact, suppressing the volume of solicitations," Davidson says. He added, though, that issuers are making up for lost time by driving up interest rates. "We're seeing APRs continue to increase as issuers are trying to increase revenues." Keep in mind, these interest rates are rising even though the prime rate -- what the banks pay when they borrow money from each other, basically -- hasn't gone up a bit.

Not all card companies are blanketing the mailboxes of America to an equal degree.

"You're seeing issuers like Bank of America, Citi and Discover still mailing out fairly low levels," Davidson said. They may be biding their time, or they may simply be exercising more discretion in who they mail those offers to. Subprime cards for people with blemished credit haven't come back to nearly the same level as those for consumers with good credit. Perhaps that's the silver lining to this whole credit mess: Banks are finally being choosy about who they give credit cards to, hopefully saving some consumers from themselves in the process.
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