You probably receive plenty of credit card offers, through both direct mail and digital methods like card issuer e-mails and social media ads. Which path is more effective? Of course, if you aren't receptive to a new credit card offer then neither path works, but for consumers who are interested in a new card, digital methods are preferred.
A recent Credit Card Response Rate Report from Mintel Comperemedia collected input from 3,000 consumers and found a significant trend toward digital credit card submissions. Credit card marketing offers are almost equally split between digital and non-digital methods, but nearly three-quarters (73%) of completed applications are received digitally. The remaining 27% are divided among in-person applications (11%), non-mobile phone applications (8%), and replies by mail (8%).
The convenience of mobile devices may also be aiding this trend. According to the Mintel report, nearly half, 44%, of all credit applications are completed using smartphones or tablets.
Why wouldn't digital credit card marketing methods blossom, when so many methods are available? Almost one-quarter of credit card offers came via websites, either card issuer websites or third-party websites that allow consumers to compare similar offerings from different issuers. E-mails from card issuers made up 11% of offers, while mobile apps and social media channels each claimed 6% of offers. Text messages were the least used, at 3% of all offers.
Direct mail offers increased from June through November of 2018, but the returns have been diminishing. Response rates from direct mail offers steadily declined over the same period, from 0.68% to 0.51%, affecting all issuers. American Express was the only major issuer to top a 1% response rate, with a relatively impressive 1.84%.
Digital marketing methods may be on the rise, but they aren't enough to reverse lower application rates. Marketers are apparently trying hard, as the percentage of consumers who received a credit card offer increased from 54% to 67% over nine months in 2018. Despite these efforts, the Mintel report cited a 21% drop-off in credit card applications through November 2018.
Why are credit card applications declining? Perhaps debt has finally reached unsustainable levels. According to the New York Federal Reserve's recent Quarterly Report on Household Debt and Credit, household debt hit $13.54 trillion in Q4 2018 — a new record and the eighteenth consecutive quarterly increase. Interest rates are also on the rise, making new cards less attractive.
Competitive forces may be another cause for the decline. Personal loans and point-of-sale financing options are cutting into potential credit card usage, while other consumers are trying to shift away from debt entirely and increasing their use of debit cards.
Whether you prefer old-school snail mail offers, third-party comparison sites, or other digital methods, make sure that you're ready for a new card and comparison shop to verify that you've made the best choice for your situation. Why do you need a new card? Are you getting a better interest rate, consolidating debt with a balance transfer, or optimizing rewards?
Don't let marketing drive your credit card applications. Compare card offers to your set of goals instead and use the card issuer's marketing tools to your advantage.
Credit cards can be an effective way to manage money, improve credit, earn points, and travel with perks if used the right way. Benzinga's personal finance staff provides tips on using credit cards effectively.
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