Credit Card Issuers Are Looking for New Customers

If you’re in the market for a credit card, there is good news. According to Bloomberg, lenders are aggressively trying to sign up new customers for the remainder of the year. Do not be surprised if you see offers showing up by the dozen in your mailbox. Card companies American Express and Capital One Financial Corp. are the most eager, trying to build up their customer base through the holidays.

Low Delinquency Rates Give Card Issuers Confidence

According to reports, lenders have been surprised at the low delinquency rates on their cards, especially after the economy tanked due to the coronavirus pandemic. Many lenders were expecting a big uptick in defaults because of high unemployment, but that hasn’t happened. One executive said he had never seen such a “disconnect” between the economy and the payment habits of borrowers.

Generally, the final three months of the year is the busiest time for card issuers searching for new customers. However, this year could see more concerted efforts to find new sign ups. Indeed, card issuers are ramping up marketing efforts. American Express is spending roughly $1.6 billion in the fourth quarter to reach consumers. For its part, Capital One is spending much more than the $283 million they spent in the fall.

Card Issuers Are Searching for Profitable Customers

The credit card industry continues to evolve. For example, issuers have focused on the past few years on signing up users who do not carry a balance. Instead, card issuers make money on “swipe fees”—fees charged whenever the card is swiped. However, the largest swipe fees are paid by airlines and hotels, which have seen their business collapse due to the pandemic.

If you have decent credit, you might be an attractive consumer for a credit card issuer—regardless of the pandemic. However, does this mean now is the right time to sign up for a new credit card?

Be Choosey

If your credit is terrible, then you probably won’t see many offers. After all, no credit card company wants to be left holding the bag when a consumer defaults. However, if you have good credit, you should still be picky about what cards to sign up for.

Look for cards with decent rewards. As the Simple Dollar explains, reward programs vary widely. For example, some offer a cash back option, which is certainly convenient, while others only offer points or miles. Also look for cards that offer rewards for purchases you make regularly. The goal of a credit card rewards program is never to change your buying behavior to chase rewards.

Also consider whether the card offers a balance transfer option with a low rate. For example, some cards offer 0% APR for 12-18 months. This can help you pay off debts in a convenient manner by transferring balances from cards with high APRs to the new card.

Are You Struggling with Debt?

Many consumers are struggling with expenses and job loss. If so, please contact the Plantation bankruptcy attorneys at Nowack & Olson today. Often, filing for bankruptcy is a better option than trying to pay off debt, even using a balance transfer. To schedule a consultation, call us or send an online message.

Resources:

bloomberg.com/news/articles/2020-10-23/card-companies-surprised-by-low-write-offs-seek-new-customers

thesimpledollar.com/credit-cards/comparing-credit-card-rewards-programs/