Americans Get 4B New Credit Card Offers in 2011 but Are We Interested The number of new credit card offers sent to US consumers in 2011 was the highest since 2007.
We learned that card issuers Americans Get 4B New Credit Card Offers in 2011 but Are We Interested:
These new numbers are not a surprise, as the perceived improvement in the economy must have renewed issuers’ interest in providing new loans.
. But what is surprising, at least to me, is how far some issuers are willing to go. As we’ve previously pointed out, and as the Globe notes , some of these new messages come with incredibly attractive sign-up incentives. Some of them are so good that I can’t remember ever seeing a better one.
This exceptionally high quality also raises the question of whether issuers are really that desperate to get new customers, or are forced to be so generous because we simply don’t care what they have to offer.
Citibank, Chase, lead the way
It turns out that while credit card mailings quickly caught up to pre-crisis levels last year, not all major issuers were equally aggressive in stuffing Americans’ mailboxes. In fact, the number one sender – Citibank – sent out more than five times as many new credit card offers as the number six bank on the list – Bank of America. Here is the complete order:
Citibank – 381.6 million.
Chase – 304.5 million.
American Express – 94.1 million.
Capital One – 91.3 million.
Discover – 88.4 million.
Bank of America – 74.1 million.
Overall, the six largest US credit card issuers were responsible for just over a billion credit card offers in 2011 – a quarter of the total.
What would it take to convince Americans to accept these offers?
Quite a lot, judging by the signup bonuses on offer. Here’s a sample picked by the Globe:
For example, Chase is offering 50,000 bonus points — good for roughly $625 worth of travel rewards — for signing up for its “Sapphire Preferred Card.” Capital One offers 1.5 percent cash back on purchases plus a one-time $100 bonus for its “Cash Credit Card.” Citibank launches ‘Platinum Select MasterCard’ with zero interest for 21 months.
Many more can be added to this list. I personally received several letters from Chase last year offering different amounts of cash-back due after the first purchase, and I accepted the $250 bonus offer. The card also has a rewards program that gives me up to three percent back on purchases. I received similar offers from American Express and Citibank, and some less generous ones from Capital One. Bank of America and Discover are the only members of the Big Six who have yet to send me a pre-approved offer Americans Get 4B New Credit Card Offers in 2011 but Are We Interested.
There’s no question that US issuers are more interested in expanding their credit card portfolios now than they were at any time before the financial crisis hit, and there’s good reason for their enthusiasm Americans Get 4B New Credit Card Offers in 2011 but Are We Interested.
The economic news has been mostly positive lately, and Americans are starting to spend more freely again, as Federal Reserve data tells us. In addition, debt repayment discipline is very high, as evidenced by historically low credit card delinquency and delinquency rates, as well as record high monthly debt repayment rates.
These numbers have encouraged issuers to go after sub-prime borrowers in earnest again. In the first half of 2011, 5.4 million new credit cards, out of a total of 18 million, were issued to subprime borrowers, according to data from Equifax, the credit agency that defines sub-prime as a credit score below 660. The numbers half of them are not available yet, but they will definitely be even better.
Still, I think the sign-up bonus and reward programs offered best demonstrate how eager issuers are to attract new customers. But it also makes you think. I’m really tempted to think that if we have such a big incentive to convince us to open a new credit card, we mustn’t want it as much as we used to. But then again, credit card spending is on the rise, so even if it’s real, this new fad may soon pass. We’ll see Americans Get 4B New Credit Card Offers in 2011 but Are We Interested.
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Author: Ruth Susswein
This year, for the first time, consumers can visit one website to learn the price and terms of most credit cards on the market — at least in theory.
The Credit Card Act of 2009 required the Federal Reserve to create a website that would make credit card terms and prices available to consumers, researchers, and advocates to shed light on the often complicated, tedious, hidden, and labor-intensive credit card process. shopping.
However, the Fed site needs improvement before it will be useful to consumers looking for the right card.
Too much or too little?
When Consumer Action reviewed issuer information for our 2010-2011 Credit Card Survey, we found that it’s often impossible to tell which credit card you’re looking at Americans Get 4B New Credit Card Offers in 2011 but Are We Interested.
While the information is sorted by issuer, the contracts, each of which has its own PDF, are often not labeled by card name. For example, cards are often listed as “Contract 1 or 2” instead of a product name, such as the XYZ Bank Platinum Card. One has to download each contract individually to find out that in some cases the name of the card is not mentioned in the contract. Others offer only vague terms.
Let’s say you’re looking for details on the Discover Miles tab. If you download a generic contract from the Fed’s website, all you’ll know is that your interest rate will be somewhere between 9.9% and 22.9%, with an annual fee ranging from zero to $60. That’s a lot of wiggle room Americans Get 4B New Credit Card Offers in 2011 but Are We Interested.
Some card issuers (like Everbank and Golden1 Federal Credit Union) don’t have any agreements on the Fed’s site because smaller issuers and some credit unions don’t have to submit their cards.
Other issuers, such as Wells Fargo and Citibank, list eight and 10 contracts, each without a name, but we found no information for the cards we review year after year. We found that 17 of the 41 cards we chose to survey (41%) had no PDF on the Fed site. This may be because issuers are only required to publish contracts for cards they are actively promoting to new customers.
Information about rates and fees on the Fed’s website may be accurate, but it can be difficult to determine. The Fed does not require rate and fee information to be updated unless there has been a change in the supply.
HSBC, which issues many private-label cards with retailers and other companies, included more than 30 card contracts on the Fed’s site, but it was nearly impossible to tell which cards the information was for because most were identified only by a long string Americans Get 4B New Credit Card Offers in 2011 but Are We Interested.
number instead of card name. Some of the HSBC deals we found in September and October 2010 were dated February 2008. Although the information is still current, we believe consumers may be confused by the old dates.
The Federal Reserve System has a disclaimer that it “is not responsible for the content of the agreements, including any inconsistencies … omissions … or any other errors.” The Fed’s system, which requires quarterly updates of new offers, results in a delay in the publication of current offers, adding to the confusion.
Restrictions on the Fed’s website can lead to a lot of guesswork and confusion on the part of consumers—certainly not what Congress intended when they passed the CARD Act Americans Get 4B New Credit Card Offers in 2011 but Are We Interested.
Some issuers registered only one deal on the Fed’s website that covered all of their current bids. For example, Capital One listed interest rates as 0% to 14.9% and 9.9% to 24.9%. Consumers would be better served by visiting Capital One’s website, where cardholders are assigned appropriate cards based on their credit history.
Not all issuers provide complete information about card terms and fees even on their own websites Americans Get 4B New Credit Card Offers in 2011 but Are We Interested.
Every year, Consumer Action finds that some information that can cost consumers money is missing, unclear, or buried too deep for even a die-hard researcher to find. Some sites (like Capital One and American Express) provide excellent information on key interest rates and fees.
cannot be found
Since the CARD Act, we’re finding that credit card information is much clearer with most leading issuers. However, some costs are not required to be disclosed, such as a fee for paying your bill on the due date with the help of an agent. This fee is difficult for potential cardholders to determine, but if you’re someone who tends to pay your bill at the last minute, you might want to know before you pick up a card that it’s going to cost you $15. For now, you’ll have to call the card company’s customer service line and hope the representative has the correct information Americans Get 4B New Credit Card Offers in 2011 but Are We Interested.
“No customer should take out a loan without first knowing the cost and risks of the deal,” presidential adviser Elizabeth Warren told a room full of consumer advocates in December 2010. Warren said one of the first priorities of the new consumer. The Financial Protection Bureau (CFPB) is supposed to add more clarity to credit card pricing so people can fairly evaluate and compare costs Americans Get 4B New Credit Card Offers in 2011 but Are We Interested.
Interest rates up
Many cardholders have complained to Consumer Action that they have seen interest rates on their cards rise over the past year. Our credit card survey found that the average variable interest rate jumped nearly two points in 2010—from 13.20% in 2009 to 15.06%. Meanwhile, the prime rate (to which variable credit card rates are tied) has remained at 3.25% for several years.
“As card issuers have lost unlimited freedom to penalize cardholders for risky behavior, we’re starting to see the true cost of credit up front,” says Linda Sherry, Consumer Action’s director of national priorities. “I think we can attribute the recent rate hikes to a renewed effort by issuers to ensure that interest rates reflect the creditworthiness of customers. While rates may still rise in the future, card companies now need to price accounts correctly from the start, instead of sneaking in profits on the back end through penalty fees and interest rates Americans Get 4B New Credit Card Offers in 2011 but Are We Interested.”
The two major credit card issuers in our survey have stopped imposing penalty (default) interest rates. Our inspectors found that Bank of America lists “None” in its application notices, and Wells Fargo’s filings show it shed its default rate in July. So what’s the catch? Card issuers are shifting their emphasis from penalty pricing to risk-based pricing. (See “Credit Card Pitfalls Still Exist” for more on this phenomenon Americans Get 4B New Credit Card Offers in 2011 but Are We Interested.)
One penalty rate worth noting in this year’s survey is at HSBC. We rarely, if ever, see penalty rates go down – especially with no movement in the base rate. HSBC had the highest penalty rate in our last two surveys (31.99%). This year, we found a penalty rate of 27.24% on the two HSBC cards we examined, a drop of almost five percentage points Americans Get 4B New Credit Card Offers in 2011 but Are We Interested.
Breaking the 18% ceiling
Credit unions are traditionally known for offering slightly better rates and fees to cardholders, especially when it comes to penalties. However, there are some signs in this year’s survey that this may be changing. National credit unions have an 18% cap on how high their interest rate can go — even if you get hit.
Credit card debt in the United States surged from April to June as Americans borrowed billions of dollars to continue spending in the face of rising inflation, according to a report from the Federal Reserve Bank of New York on Tuesday.
Credit card balances increased by $46 billion in the second quarter, up 5.5 percent from the first quarter, and there was also an increase in new credit card accounts. The 13 percent increase from the second quarter of 2021 to the second quarter of 2022 was the largest such jump in more than 20 years.
“Americans are borrowing more, but much of the increased borrowing can be attributed to higher prices,” New York Fed researchers said in a news release.
The US economy shrinks again in the second quarter, reviving fears of a recession
The numbers provide new context for the consumer spending report released last week by the Bureau of Economic Analysis, which showed spending rose 1.1 percent in June. Like the New York Fed’s findings, the likely drivers of the increased debt were gas prices, which topped $5 a gallon in many parts of the country in the second quarter, and inflation, which jumped 9.1 percent year-over-year in June Americans Get 4B New Credit Card Offers in 2011 but Are We Interested.
The increase in new credit card accounts in the second quarter — 233 million — was the most since 2008, according to a report on Tuesday. But researchers for the New York Fed noted that delinquency rates for credit card debt are still relatively low. Despite the slight increase, it is still below pre-pandemic numbers. Total outstanding credit card debt rose to $890 billion in the second quarter, up $100 billion from the same period last year.
A report released Tuesday found that household debt rose by $312 billion in the second quarter, or 2 percent, compared with the first quarter. Total balances are now $2 trillion higher than before the pandemic.
Mortgage balances saw the biggest rise, in line with the central bank raising interest rates to cool the red-hot housing market. Auto loans also rose, with balances rising $33 billion in the second quarter, on track with increases since 2011, according to the report Americans Get 4B New Credit Card Offers in 2011 but Are We Interested.
“The second quarter of 2022 showed significant increases in mortgage, auto loan and credit card balances, driven in part by rising prices,” Joelle Scally, administrator of the New York Fed’s Center for Microeconomic Data, said in a news release. “While household balance sheets appear to be in a strong position overall, we are seeing rising delinquencies among subprime and low-income borrowers, with rates approaching pre-pandemic levels.”
Increased credit card debt reflects consumers’ efforts to keep up with inflation. Stubbornly high prices for food, gas, and other essentials have changed the way Americans spend their money—forgoing the clothing and technology aisles to afford household items Americans Get 4B New Credit Card Offers in 2011 but Are We Interested.
Some sellers have warning signs. Last week, Walmart cut its quarterly and full-year profit forecasts and announced aggressive discounts on merchandise to ease the inventory build-up. The move rattled Wall Street, sending shares of the nation’s largest retailer down 7.6 percent and dragging down other major retailers, including Target, Macy’s and Kohls Americans Get 4B New Credit Card Offers in 2011 but Are We Interested.
Best Buy CEO Corie Barry also noted last week that consumers who are more savvy and focused on spending have caused demand for electronics to decline. Consumer goods companies have also recently indicated declines. Procter & Gamble executives have warned that the company expects a tougher year in 2023.
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