Change Of Marketing Focus Seen In Marketing Campaigns Of Credit Card Companies

Credit card companies are beginning to change their marketing tactics in these days of slow economic growth. Gone are the days when credit card companies would target every consumer who could legally apply for a credit card with little consideration of how well they could keep up with their payments.

According to direct marketing tracking company Mintel Comperemedia, there is a definite trend among credit card companies of moving to the more moneyed consumer segment in their credit card marketing campaigns. Nowadays, premium credit card offers are becoming more and more common. Thus, American consumers with excellent financial standing have now become the primary targets of credit card marketing.

This current trend is a direct reversal of the past practices of credit card company. In the past, subprime credit cards were the norm and a number of major credit card companies saw much of their profits coming from subprime credit card holders. However, credit card industry experts have always considered this to be a very risky proposition for both credit cardholders and credit card companies. Credit card companies saw much of their profits from this arrangement coming from the interests and fees that cardholders were paying when they fell into maintaining revolving debts, which happened very often.

While credit card companies may see a lot of profits from subprime credit card holders, if drastic financial changes come up which would severely challenge subprime credit card holders, credit card companies have a high risk of losing their subprime debts to charge-offs. This is exactly what happened when the economic crisis hit. When record numbers of credit card holders stopped paying their debts, the charge-off rate increased dramatically and several credit card companies almost went bankrupt were it not for the financially assistance provided by the US government.

Now, credit card companies are trying to regain their profitability and avoid what happened to them in the past.

According to Mintel Comperemedia senior vice president Andrew Davidson, credit card companies are now competing with each other to attract consumers with excellent credit scores and large spending habits. Premium credit cards marketed towards this particular group usually have large associated fees while being low risk credit cards which makes them perfect for a credit card company trying to return to profitability given the current economic climate.

The figures release by Mintel Comperemedia shows that, for the second quarter of 2009, credit card companies sent 28% more premium card direct mail offers compared to the previous quarter. Notably, credit card offers dropped by 8% in the same quarter. Premium credit cards also accounted for 19% of mail campaigns in the first half of 2009, an appreciable increase from the 9% recorded during the first half of 2008.