Credit card mail volume in the U.S. remained stable during the third quarter as issuers continued mailing credit offers to high-risk households according to Mail Monitor, the direct mail tracking service from Synovate.
During the quarter, 1.29 billion card offers were mailed to U.S. households compared to 1.27 billion offers sent during the previous quarter. Approximately 363 million of the total offers mailed in third quarter went out to potentially high-risk households (those already utilizing more than 30% of their available credit) while 347 million offers were sent to high-risk households during the second quarter.
"Despite the credit crunch and increase in housing foreclosures, the majority of these households continue to receive an average of 6.4 offers for new credit cards every month,” said Andrew Davidson, vice president of Synovate, in a statement.
In addition to card offers and response rates, the service tracks the credit card utilization ratio, which represents current outstanding balances plus new charges expressed as a percentage of the total credit line available across all credit cards in the household.
"Nearly half of all ultra utilization households have 'maxed out' by tapping 75% of their available credit. Not surprisingly, 28% of these households were charged a late or over the limit fee in the past year,” said Davidson.
Ultra utilization households receive more card offers than other types of households and response rates are also higher than average at 0.8% versus 0.5% among all cardholders.
"Even though these households own multiple cards and receive multiple offers each month they are more likely to apply for new cards,” said Davidson. "Their propensity to revolve credit makes them receptive to lower rate and balance transfer offers. Also, since they have already utilized a good proportion of their available credit lines, many will be looking to extend their access to credit to avoid the risk of paying costly over-the-limit fees,” he said.
"Ultra Utilization households are more risky than others and will feel the impact of the credit crunch more than most,” continued Davidson. “These households are no longer a niche market and represent a large and growing proportion of those with credit cards. For now, it seems that card issuers are willing to take on the risk given the potential for growth.”
