The Borrowers
Where did credit-card junk mail go?
Credit card offers aren't clogging up the mail like they used to. Those that do come in aren't the zero-interest, zero-fee deals of the past. Rico Gagliano reports.
Mailbag (iStockPhoto)
More on Spending, America's Financial Crisis
TEXT OF STORY
TESS VIGELAND: I'm Tess Vigeland. And I'm one of those people who looks forward to arriving home and checking to see if there's any mail. In the age of email and e-vites, it just feels so special to actually get an envelope with your name on it that you can see and touch.
Except, of course, for envelopes with junk mail in them, like those formerly ubiquitous credit card solicitations. Don't miss those, but apparently some people do.
Here's Marketplace's Rico Gagliano.
Rico Gagliano: Now I know what you're thinking -- no junk mail is good junk mail. And personally, I agree. On my list of all-time most hated things, I'd place junk mail just below fascism.
[Rico groaning.]
That's me at my mailbox.
[Rico opening his mail.]
And that's me a minute later, shredding the ads, menus and catalogs stuffed inside my mailbox.
But here's the thing -- I thought everyone shared my hatred of this stuff. Not so.
Betsy Streisand: I actually like getting credit card solicitations.
Ladies and gentlemen, Marketplace Senior Editor Betsy Streisand. And no, she is not clinically insane. Before the credit crunch hit, she shared my disdain for the forest's worth of card offers that packed her mailbox every week. But after the credit crunch hit?
Betsy: They stopped. And I felt rejected! RICO: Was it rejection or fear that maybe you were no longer a good credit risk? Betsy: It was fear and it was fear of future rejection. But then one day I came home and I had a credit card solicitation! And it was like a Sally Field moment:
Sally Field: You like me! Right now! You like me!
See for Betsy, getting a card offer in the midst of this credit crisis means she's special. A member of an elite clique of the credit-worthy. I decided to research that theory. And it turns out: Betsy's right. Kind of.
Anuj Shahani: It is absolutely true that we are seeing a significant decline in the credit card solicitations received by U.S. households.
That's Anuj Shahani. He's with Synovate, a marketing research firm, and he studies credit card mail data.
Shahani: The number of households that received a credit card solicitation dropped to 40 percent or so in the most current quarter, as compared to the historic levels of 70 percent, which we are used to seeing.
So, yes, if you get a card offer today, it means issuers consider you a better risk than over half your fellow countrymen. Maybe.
Because remember: just because you get an offer doesn't mean if you apply that you'll actually get the card. And the offers? May not be what you're used to.
Shahani: People are getting solicitations which are slightly more upscale. The offers tend to have a higher rewards or better rewards programs and also that tend to be with a fee.
In other words, forget free cards with low fixed-interest rates. Issuers these days want you to pay an annual fee in exchange for, say, airline miles. Why that shift?
Nessa Feddis is vice president of the American Bankers Association. She chalks it up to the Credit CARD Act Congress passed in May.
Nessa Feddis: It restricts the ability to raise interest rates on existing balances. And that means that credit card companies have to use some other model to be able to manage the risks that people aren't going to be able to repay their loans.
The companies would rather charge fees than plan on earning money off interest rates they can't raise. But wait a minute. What if folks like Betsy Streisand don't want a fee-based card? She's part of an elite clique, the mere 40 percent of households who even get card offers! Doesn't she have the power to ask for whatever card she wants?
According to Nessa, not unless Betsy's super special.
Feddis: There's a small group that's really super credit-worthy, and they'll probably have the most choices, but you've got a vast swath of people who may be surprised.
She says a 780 credit score, a great payment history and a card offer in hand doesn't mean you've got bargaining power. In this economy, companies want more.
Feddis: They may be looking at assets. I mean somebody like Warren Buffett, yeah, I think we know that he's got assets in case he's not able to repay his credit card. Rico: Does he get a lot of credit card solicitations, do you think? Feddis: Ha! I have no idea. Rico: I think he's got as many credit cards as he needs at this point. Feddis: I think he probably does, but you get my drift.
I do, and it's this: If you think you're a big shot because of a Visa offer in your mailbox, well, you might not be as big as you think.
In Los Angeles, I'm Rico Gagliano for Marketplace.
Comments
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From Hercules, CA, 06/29/2009
Responding to Robin B.: I place credit card companies right up there with Bernard Maddoff. Are credit card users now supposed to keep our fingers crossed over our accounts with balances to fend off unfair business practices like unilaterally hiking the minimum monthly payment? It is said that credit card agreements are contracts. If that is so, why is it that the Company is the only party who gets to unilaterally change the terms and conditions of these contracts after the customer reasonably relies on what she thinks are the operating terms (minimum mthly pymt) of the contract when she adds on debt?? Yes, by all means contact your representatives in D.C. and a consumer watchdog organization about these endless attempts to undermine a consumer's attempts to prudently manage her debt.
06/29/2009
I have been diligently paying off some large credit card balances over the past several years, exceeding minimum payment requirements and NEVER late. I just got a notice in the mail from one of the companies saying effective 9/1/2009 they will be more than doubling my minimum payment! I was shocked as it will truly be hardship on me and I know that if I don't make their minimum, they will use that as an excuse to jack up my interest rate from the present 5% to some insane amount. What can I do? Will contacting my representatives in Congress or my State Attorney General assist me? When I called the cc company, they, of course, said there was no "opt out" on this and basically wouldn't listen to my concerns or give me to someone higher p that could negotiate this.
From Prescott, AZ, 06/26/2009
Several years ago, when we were getting credit card offers by the dozens every month, often from the same companies, my husband and I signed up to opt out of receiving any more unsolicited offers. It saved us a lot of hassle, and it worked--no more offers. I suppose these days we might not be getting the flood of offers we once did, but I think we saved a tree and many headaches by getting a head start.
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