What makes consumers apply for credit cards?

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By: Wise Marketer Staff |

Posted on August 30, 2002

Direct mail is still the best way to offer credit cards to consumers in the US, according to the 'Customer Focus 2002: Direct Marketing' survey for the financial services sector, published by Vertis.

The annual survey provides insights into consumers' financial goals, investment plans, preferred credit card incentives, credit card usage habits and direct mail readership. It aims to provide the financial services industry with consumer data including specific habits, attitudes and behaviours when reading and responding to direct mail.

Direct mail readership
This year direct mail has remained an effective medium for reaching potential credit card applicants. Customer Focus asked adults how they became aware of the last credit card they applied for, and 48% said they learned about it by direct mail. This is quite notable when compared with the number of people who named other sources, including friend or relative (7%), at their bank (7%), special events or in-person promotions (4%), the internet (3%), and telemarketers (3%). Financial services direct mail is read most often by younger adults - a number that decreases with age, according to the survey. Only half the number of seniors said they read financial or credit card direct mail.

Consumer goals
When sending financial direct mail, suggests Vertis, it is important to understand the needs and concerns of consumers in order to determine the right messages for different audiences. A considerable number of 'Generation X' and young 'baby boomers' indicated that their children's education was included in their financial goals (61% and 56% respectively). Meanwhile, older adults are more likely to plan a vehicle or boat purchase.

When selecting a credit card, 22% of adults were attracted to money-back incentives, while 19% like to earn points for merchandise, airline tickets and hotel stays. Other incentives, such as a sign-up bonus or higher membership level, appealed to less than 10% of the adults. The survey asked about the most important factors for selecting a financial service company, and the top three criteria were: good reputation (27%), high return or interest on investments (19%), and a well-known company (11%). Vertis found that company reputation was most significant for the young baby boomer generation, and also for those in higher income brackets.

Credit card usage
Although many Americans hold multiple credit cards, and many admit to struggling to pay them off each month, some 36% of adults surveyed said that they did not even have a credit card. Among credit card holders, 51% pay off their balance in full each month, while 35% make partial payments and claim that their balance is reducing. Most senior adults (81%) pay off their credit card balances every month, while only 42% of young baby boomers, and 39% of both Generation X and Y adults do the same.

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