August 25, 2009
-
News: Credit Card Offers Still Declining
During the wake of the recession, credit card companies make massive cuts in several programs in order to reduce credit risks. One notable area was that of those almost daily solicitations of inviting credit card offers. According to a recent study conducted by Synovate, financial institutions became very selective on which customers they made offers to and only the most creditworthy with FICO scores over 700 were targeted. Synovate is a global market research company that services clients in over 60 countries and has been tracking the credit card offering activities of lenders over the past several years. The study indicated that although card offers have dropped nearly 6% for second quarter from the previous quarter, the drop is not as drastic as it was in previous quarters.
Anuj Shahani, the Director of Competitive Tracking Services for Synovate says this could be a sign of the "flattening out or bottoming out." If true, this could be good news for creditworthy customers who desire a more competitive credit card deal. Lenders will continue to be selective on who receives inviting offers and those who do are sure to notice some major differences from previous offers. The most notable will most likely be the elimination of fixed interest rate credit cards. Most lenders have switched to the variable rate which will allow the company to react quickly in light of a raise in prime rate.
Last year nationwide credit card companies sent out a whooping 1 billion offers; a number which decrease by 44% within a six month period. By end of second quarter 2009, a mere 349.1 million were sent out. The report also indicates that some major lenders have actually increased their offerings. During the second quarter, Bank of American sent out over 55.2 million offers while Citibank sent out 56.1 million. The sign is encouraging; however, lenders are sure to remain cautious in their actions to protect assets and reduce credit risks.