Reward Cards Make Up Majority of Offers
Mintel said this trend began in December and continued through January and February. For the past three months, 53 percent of all card offers came with a reward program, compared with 45 percent for the same period in 2003 and 30 percent for that period in 2002.
Almost 90 percent of these cards lack an annual fee, making them more attractive for consumers to earn points toward shopping, free travel or cash-back rewards, according to Mintel. Cash back is by far the most popular reward, with about 90 percent of reward cards offering cash back or a cash rebate.
Credit card offers with rewards are more likely to be sent to households with incomes exceeding $50,000, whereas cards without a reward program are marketed in proportion to the income breakdown, Mintel said.
"We would expect cards with added perks such as reward programs to be offered to a more desirable customer, as these are the customers most issuers wish to acquire and retain," said Susan Wolfe, vice president of research at Mintel's Comperemedia. "With issuers fighting for the same pool of people, offers need to stand out and deliver something to the consumer other than convenience."
Mintel also said that after several months of depressed direct mail volumes for credit card offers, mail volume increased 36 percent from January to February, with an estimated 347 million offers sent in February. Mail volume in the credit card sector has not been that high since October 2002, when it reached 366 million.
In other news, Bank of America Corp., Charlotte, NC, the second-biggest U.S. bank, said yesterday that it opened more than 1 million new credit card accounts in its first quarter, which ended March 31, compared with 741,000 in the same period a year ago.
This growth was driven by the development of more competitive offers, improved technology at the point of sale and an increase in direct mail marketing, the bank said.