Banks Halve Credit-Card Offers; Want Consumers to Spend Own Money

May 26, 2009

Faced with mounting delinquencies and charge-offs, US banks have cut in half the number of credit-card solicitations they are sending out, while encouraging consumers to spend their own money – through the use of debit cards and checking accounts, according to research from Mintel.

In the first quarter of 2009, credit-card issuers cut solicitations in half, reducing mail volume 49% vs. Q408, Mintel said. The research company estimates that US card issuers sent fewer than 500 million offers in Q109, the lowest quarterly total recorded since 2000.

Though credit is being cut back, the data shows that the number of debit card mail offers nearly doubled from Q408 to Q109, while checking account solicitations grew by 29%.

Less Reliance on Credit Cards

The mailing of fewer credit-card offers and more debit-card offers is being mirrored in consumer spending behavior, the research found. More than two in five American adults (43%) say they’re using debit cards more and credit cards less because of the recession, while another 22% say they’re relying less on both debit and credit cards as they reduce spending.

Overall, 83% of survey respondents report having changed their spending habits in some way because of the current state of the economy, the study found.

“The recession has truly jolted American spending, causing people to cut back on purchases and conduct their finances more conservatively,” said Stephen Clifford, VP of financial services at Mintel Comperemedia. “To avoid taking on more debt, many people have changed their payment habits, choosing debit over credit cards for greater control.”

Mintel Comperemedia research from earlier this year showed that credit-card solicitations to the wealthy have not plummeted as dramatically as those to lower-income groups.

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