Citigroup is stepping up its credit card offers by postal mail in a large way, writes the Wall Street Journal. Arriving at a North American mailbox near you in the third quarter will be an estimat-ed 346 million credit card deals, accord-ing to statistics authored by analysis firm Synovate. It will cost $240 million for Citigroup to reach each and every person in the U.S., greater than once.
One in three charge card promotions were already Citi
After the 3rd quarter num-bers are tabulated, Citigroup will most likely take the lead from Chase as it is already one of the most active mailers for charge card of-fers. Considering that the company has re-portedly lost hundreds of millions of dollars on charge cards during the financial cri-sis, executives believe the mass mailing will be money well spent.
Citigroup has lots of ground to make up since the Nilson Report said that Citigroup currently is behind American Express, J.P. Morgan Chase & Co. and Bank of America in dollars spent on credit cards by U.S. customers, making it fourth.
It’s only going to get better from here
Citigroup is confident that the worst has already hit be-cause of the reduction in non-collectable credit card debt in the U.S. In the second quar-ter of 2011, Citigroup made $584, showing this must be true. This is because a year before, $154 million was reported by the company as earnings.
This can be a good opportuni-ty with the opposition slowing down with mailings, according to Citigroup executive Jud Linville. Last quarter, there were less mailing from Bank of America, Discover and American Express.
“This is a business where you look for vacuums,” Linville said. “Are there players moving out of certain categories?”
Bridging the void of the Dodd-Frank Act
Merchants will be stopped from charging too much cash for debit card swipe fees in October. This is be-cause of the Dodd-Frank Act’s Durbin Amendment. This makes debit cards significant-ly less profitable for issuing banks, which in turn has brought on many issuers to drop costly rewards programs.
The idea Citigroup has is to make up for this. It plans on getting people interested in its charge cards for this reason. To grease the wheels, Citi has offered credit cards with simplified fee structures this summer, some with no annual fee or late charges, others with zero percent balance trans-fers. Customers that take advantage of the offers will end up making Citi some cash. It will be worth it in the end.
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