Credit Card Issuers' Combo Offers Rise

Fighting for new credit card holders in a fiercely competitive, saturated marketplace, banks are not only using more reward-program and rebate offers--increasingly, they're combining the two.

Data from Mail Monitor, Synovate's direct mail tracking service, shows that 21% of credit card issuers' total direct mail offers last year featured both reward and rebate offers--up from just 4% five years ago.

While the 21% represented a slight decline from 2006's 25%, that was primarily due to Chase having cut back its overall direct mail volume last year, according to Andrew Davidson, vice president, competitive tracking services for Synovate's Financial Services Group.

Response rates for the combined offers have by and large actually been a bit lower than those for reward-only or rebate-only--last year, they averaged 0.2%, versus 0.3% for reward-only and for rebate-only offers, for example.

But if a double incentive is what it takes to pull in some consumers, the card issuers will keep them coming. "We expect to see the trend in combined reward/rebate offers continue as issuers seek to promote increased usage," Davidson says.

Meanwhile, reward-only offers accounted for 25% of total '07 credit card direct mail offers--about the same level this offer has seen since 2003, when reward-only offers shot up to 22% from just 13% in 2002. Top reward mailers include Amex, Bank of America, Chase and Capital One. Rebate-only offers rose slightly last year to 15%, from 13% in 2006. Those offers have accounted for between 13% and 15% of total direct mail offers since 2003. (They jumped from 10% to 14% between 2002 and 2003.) Top rebate mailers include Chase, Discover, Capital One and Bank of America.

The data add up to a significant overall increase in promotions featuring reward, rebate or combined offers. In total, these offers now account for 60% of all credit card direct mail offers--up from just 27% in 2002 and 43% in 2003.

In terms of mail volume, the three types of offers accounted for 3.14 billion pieces last year--nearly a 140% increase over 2002's 1.31 billion pieces carrying such offers. Overall, response rates to reward, rebate and combined offers were down slightly last year. Reward-only and rebate-only response rates each dipped from 0.4% to 0.3%, and the reward/rebate response rate dipped from 0.3% to 0.2%.

Speaking of saturation, back in 2002 to 2004, response rates for reward- and rebate-only offers were as high as 0.5% to 0.6%.

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