Not Offering Credit Where Credit Isn’t Due

Looking for good news where they can find it these days, consumers may celebrate one consequence of this year’s economic turmoil and the credit crunch that’s a key part of it: Their mailboxes are less cluttered with solicitations from credit-card companies. This also counts as good news for direct-mail marketers in other categories, as their own mailings have less competition for recipients’ attention.

A report from Synovate, based on tracking by its Mail Monitor operation, predicts that Americans will end up getting some 4.2 billion credit-card offers in the mail during all of 2008 — down from the 5.2 billion received last year. Households with income under $50,000 account for the lion’s share of the reduction in mailings. Synovate refers to this as “a major change in strategy by card issuers.”

One might have thought it had always been standard operating procedure to make these offers mostly to people who have lots of income and, at least in theory, a decent chance of being able to pay their credit-card bills each month. In less-rocky times, though, credit-card companies actually make lots of money from people who keep large balances on their cards and pay the interest that this entails. Now, amid the current credit crunch, the companies are putting a greater premium on consumers’ ability to pay their bills and not drift into bankruptcy.

The report also took a look at how much people owe on their cards. For households that don’t pay their bills in full each month, the unpaid balance has averaged $7,539 through the first three quarters of this year. That’s up from $7,008 last year. And despite much-noted cutbacks in consumer spending, the average value of a consumer’s new monthly charges has risen to $1,533 so far this year from $1,402 in the first three quarters of 2007.

A report from Mintel Comperemedia also notes a decline this year in mailings of credit-card offers. For instance, it says mailings fell 28 percent in the third quarter of this year vs. the third quarter of 2007. The report emphasizes, though, that a downturn in such mailings predates the mortgage crisis and credit crunch, as card issuers had already realized they weren’t getting a good return (in the form of more customers or greater usage of cards) by indiscriminately sending out tons of mail.