One sure sign of economic recovery is consumer willingness to use debt once again. Consumers started increasing their levels of debt as of last December. This new attitude means that credit card marketers are likely to boost their promotions in 2011.
A recently issued Federal Reserve report reveals that consumers upped their credit use by 3% to $2.41 trillion (seasonally adjusted) at the end of last year. Borrowing had been severely curtailed starting in December 2007 when consumers pledged to improve their savings rate. Late last year, revolving, or credit card debt, grew to $800.5 billion, marking a 3.5% growth rate and the first increase since the start of 2008. Back then, credit card debt stood at $973.6 billion. In addition, non-revolving debt – comprised of auto loans, student loans, boat loans, etc. – grew to $1.6 trillion or by 2.8% at the end of 2010.
This trend has credit card companies preparing for new campaigns in 2011. Mintel Comperemedia statistics show that credit card companies tripled the number of card offers they made late last year. Typically, the industry has relied heavily on traditional direct mail. But there are signs that more operators will be looking to use email promotions this year. Pam Girardo, spokesperson for Capital One, indicates that by offering pre-approved offers through emails, customers can quickly respond online.
During the recession, the industry focused on customer retention. Now that more consumers are spending, companies are shifting their marketing focus to acquisition. Competition for new customers is fierce and companies are now operating within the new confines of the Credit Card Accountability, Responsibility and Disclosure Act. However, marketers are still finding ways to offer rewards such as air mileage and other product discounts for new customers that sign up.
Nobody is predicting a return to the volume of credit card promotions that flooded direct mail channels during the height of the economic boom, but analysts expect activity to increase significantly this year.[Sources: Consumer Credit. Federal Reserve Statistical Release. FederalReserve.gov. 7 Feb. 2011. Web. 22 Feb. 2011; Palmer, Alex. Credit card mailers. DMNews.com. 1 Feb. 2011. Web. 22 Feb. 2011]