Credit card mailings have vastly increased from this time last year, according to a new study from Mintel Comperemedia. Card issuers are particularly promoting rewards cards programs as they work to keep existing costumers and attract new ones.
Around 1.2 billion offers for new credit cards were sent out during the third quarter of 2010, compared to 391 million in the same period a year ago. Mintel attributed this to re-emerging competition among card issuers, which subsided somewhat during the past two years due to the unstable economy and the uncertainty over new government credit card regulations.
But issuers’ primary focus is on wooing low-risk and creditworthy consumers and, accordingly, the majority of offers are for the Cadillacs of credit cards: premium rewards credit cards that offer points, miles or cash-back. According to the Mintel study, eight out of 10 offers sent out are for rewards cards — a significant increase from last year’s numbers of six out of 10.
Andrew Davidson, senior vice president at Mintel Comperemedia, predicts that card issuers’ ability to convert costumers to their rewards programs may be crucial to their survival. A Mintel Oxygen report on loyalty marketing found that 24 percent of consumers actively compare credit card offers in order to compare reward programs. Additionally, since consumers have become more focused on saving money and charging less to their card, there has been an increased interest in cash-back programs.
“Consumers are doggedly persistent when it comes to comparing credit card offers, and will use the rewards program with the best cash-back rate or highest points return per dollar,” Davidson said in a statement. “Competition is fierce, and contrary to popular myth, some consumers do actively compare reward offers they receive in the mail.”
Card issuers have taken note of the increased interest in rewards cards: cash back credit card offers accounted for 41 percent of all rewards offers in the third quarter of 2010, up from to 28 percent a year ago. Issuers are also acknowledging consumers’ increased frugality and change in spending patterns by emphasizing rewards that offer better returns on everyday items, like groceries.
Mintel Compermedia predicts that the coming year will bring even more aggressive marketing in the rewards card segment. Even though regulations have dampened company profits, consumers still want the best rewards programs possible.
While rewards card offers are great for attracting new cardholders, with competition ever more fierce among card issuers, holding on to them might be a different matter. For this reason, card issuers may increasingly look not just for ways to outbid each other in new rewards card offers, but for ways to make rewards programs remain attractive to existing cardholders and increase cardholder loyalty over the long-term. Either way, for avid rewards card users, both scenarios will likely bring welcome news over the next year.