Think of your mailbox before the Great Recession. You got bills, grocery store circulars, invitations and magazines, but crowding them all out, we bet, were credit card offers.
Credit card issuers mailed five to seven billion offers a year from 2004 to 2007, according to Mintel Comperemedia, which tracks such things.
But when the economy tanked, default rates soared and billion-dollar losses caused banks to become much stingier with new cards.
After hearing that only 2 billion offers were mailed out last year, we wondered who was still on the mailing list.
We asked Gregory Meyer, community relations manager at Meriwest Credit Union in San Jose, Calif. He says the industry is looking for consumers with:
Above average credit scores. A high score shows you pay on time and haven’t maxed out your credit lines, making it less likely you’ll default.
“Generally, we are looking at the upper echelon in credit scores. These are people with strong credit scores greater than 720.”
A profitable history. “Card companies love the ‘Steady Eddies,’ those who pay down balances while also paying some interest. That’s their bread and butter.”
The ideal customer is “someone who might charge a $2,500 vacation to their card and pay it off at $200 a month,” allowing the issuer to earn about a year’s worth of interest on the debt.
Maturity. “It used to be that 18 year olds were the ones card companies would solicit at class registration days on college campuses, exchanging beach towels and beer coolers for applications.”
Not anymore. Default rates in the 18 to 25 age group scared them off. Plus, marketing cards is now banned on most college campuses, and anyone under 21 must now have a co-signer for their cards.
Lots of assets. Card issuers are focusing on the affluent, pouring through databases to identify potential customers with money to spend.
“They may ask for all customers in a given zip code who are over 55, have $100,000 in their IRA, own a home for at least seven years, their mortgage is current, and they have a checking account with a payroll direct deposit.”