How to Stop Getting Buried in Credit Card Offers

This post is from partner site LowCards.com.

The volume of mail delivered by the U.S. Postal Service fell nearly 6 percent in fiscal 2011, but credit card mailings last year jumped 37 percent, according to research firm Mintel Comperemedia.

“The credit card industry sent out almost five billion direct mail pieces in 2011. That was 16 pieces for every man, woman and child,” says Bill Hardekopf, CEO of LowCards.com. “If you have a good or excellent credit score, you probably had double that number of offers. Those are the customers that every issuer is trying to attract.”

The offers included cards with very low promotional rates as well as attractive balance transfer offers.

Direct mail is a proven form of attracting new applications, and issuers are determined to get their offers in front of their target households as many times as possible. Credit card issuers buy names and addresses from businesses and nonprofit agencies. This can happen when you secure a mortgage, give money to charity, or sign up for a magazine or online subscription.

Credit bureaus can also sell your name and address to lenders and direct marketers. If you receive a pre-screened or pre-approved loan offer, you’ve already met some of the criteria the issuer submitted when it purchased a list of eligible borrowers from the credit reporting bureaus. Credit bureaus don’t release specific information on a consumer, but they provide lists based on consumer characteristics. The CARD Act does require lenders to exclude from the pre-screened list anyone who’s under the age of 21.

“Direct mailings jumped last year as the economy began to recover, households charged more, and banks loosened up the lending strings,” Hardekopf says. “Expect to find just as many in your mailbox in 2012. If you have excellent credit, you’re very popular with lenders and they will use rewards and bonuses to help their card be noticed.”

There are three ways to reduce the number of direct-mail solicitations…

1. The credit bureaus offer a toll-free number so you can “opt out” of pre-approved credit offers for five years. Call 1-888-5-OPTOUT (567-8688) or visit www.optoutprescreen.com. You’ll be asked for your home telephone number, name, and Social Security number. The bureaus will keep your information confidential and use it only to process your request to opt out.
2. Send a letter to the three major credit bureaus (Experian, TransUnion, and Equifax) saying you don’t want your personal information distributed for promotional purposes.
3. Through DMAchoice.org, you can manage your direct mail and reduce credit card offers, catalogs, and other mail offers. You can also stop mail from being sent to a deceased person or manage mail for a dependant in your care.

If you find yourself considering a credit card offer that you received in the mail, here are six red flags…

1. Look beyond the rate in bold print. The offer may say zero percent in the heading, but this is just the introductory rate. Find the standard APR, which is the interest rate you will pay after the introductory period is over.
2. Don’t assume the offer you receive in the mail is the lowest rate you can receive on a credit card. Compare rates with other cards. If you carry a balance from month to month, you want a card with the lowest interest rate possible.
3. Many offers have attractive introductory rates, so check the length of the zero-percent offer and compare that to other cards. A year or more is a good introductory period. The longer the intro rate, the more time you have to pay down your balance.
4. Most cards charge a balance transfer fee to move your balance from one issuer to another. The balance transfer fee varies by issuer and is usually either 3 percent or 4 percent. Calculate whether this up-front fee outweighs the interest penalties you will save during the introductory period.
5. Beware of blank checks. While receiving blank checks in the mail is easy and cashing them is tempting, pay close attention to the fine print. Using these checks can be considered a cash advance and be subject to up-front fees and higher interest rates. Most of these blank checks are best shredded and forgotten.