Competition Between Credit Card Issuers Heats Up

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Come rain, sleet or snow, consumers are being swamped with credit card applications and balance transfer offers these days as the mailman brings the most teasers and solicitations from issuers since the start of the recession back in December 2007.

As observed by Moshe Orenbuch for Barron’s online, “Mail volume is an important measure of the competitive landscape. We believe that the operating environment faced by credit-card issuers is one of the most competitive in the history of the business.”

The CEO of one online credit comparison site concurs. “There are a lot more mailings going out. The competition among credit card issuers has definitely stepped up. They are sending out many more solicitations, especially to the most sought-after customers: those with good to excellent credit scores.”

Card issuers busily mailed out 484 million credit-card offers in May alone. That figure indicates a 9% increase in offers attempting to entice potential cardholders into applying for some new plastic as compared to what went into the mail in April, and a 41% rise over the offers sent out one year ago. The six issuers that bumped up their mailings are JPMorgan Chase, Citigroup, Bank of America, Discover Financial Services, Capital One Financial, HSBC Holdings and U.S. Bancorp.

Of all the balance transfer credit cards offers mailed out, Discover, Citigroup and Bank of America sent the most appealing ones, with 91% of the offers being 0% APR on money transferred. Even American Express is in the balance transfer game, with a relatively high number of balance transfer offers going out to consumers. Nineteen per cent of all the offers they mailed out were balance transfer promotions, a move which indicates that American Express is seeking out more credit card customers.

All these mailings seem to be working, according to a study conducted by Equifax. The credit bureau, based in Atlanta, released data showing a 35% increase in new bankcard accounts opened during the 12 months that ended on March 2011. Lines of credit were also expanded, although Equifax did not reveal by how much, nor did they disclose the exact total of new consumer credit cards accounts opened. According to Equifax’s press release, this increase in new card accounts is “a sign card lending competition is heating up.”

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