Editorial: Credit-card cos. must junk mail

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Household debt is at a record level and consumer spending surpassed disposable income this year to give the nation a negative savings rate for the first time since the Great Depression. So what do credit-card issuers do? Pitch more card deals through more direct mail. Consumers, with wallets already stuffed with plastic, are pitching the junk mail. Card issuers need to find a better way.

Credit-card companies mailed an astounding 5.23 billion offers last year, according to market researcher Synovate. That's 48 offers per household. Most ended up in the trash. Synovate said the response rate dropped last year to 0.4% from 0.6% in 2003-and 1.2% in 1998.

As for the responses, how many really stick? When consumers take a new card or transfer balances, the initial lure probably is a lower rate; they're likely to switch back or move again before the rates go up. That's no way to build loyalty.

Card issuers once were mostly local banks with look-alike MasterCards and Visas, but the industry has largely consolidated among a handful of giants that are trying to differentiate themselves based on service, card features and image.

Citibank, for example, has developed a reputation for innovative security features with its cards, and its Web site offers a simple presentation of its card offerings. MBNA, which will be swallowed by Bank of America in January, has built an image for good customer service. American Express offers "membership rewards" and the aura of exclusivity.

But distinctions get lost in the avalanche of direct mail. After Ad Age reported last week on the declining efficiency of financial mailings, our reporter heard from an American Express card holder who complained about AmEx's incessant card pitches. Doesn't AmEx know it's soliciting its own customer? That doesn't make AmEx look smart-or exclusive.

Time to think outside the mailbox. Financial-services companies need to target better and be smarter in how they go after consumers-or see their image end up in the trash.

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