Credit card offers continue to dry up

Pioneer Press

Article Last Updated: 11/10/2008 08:32:30 PM CST


The downsizing of Americans' junk mail continues. These days even Citibank and HSBC aren't writing.
By the end of this year, U.S. households will have received 1 billion fewer credit card offers than they did in 2007, market research firm Synovate said in a study released Monday.
That's down about 20 percent. This summer, Synovate found a 17 percent drop in second-quarter mailings, compared with a year ago.
Households making less than $50,000 are the hardest hit by the cutbacks, with about 700,000 fewer credit card offers in 2008 than last year, the study shows.
Solicitations from big credit card issuers HSBC, Bank of America and Citibank were down 70 percent, 44 percent and 40 percent, respectively.
Despite reports of slashed credit limits, household credit lines in the third quarter of 2008 edged up to $27,626 from $26,902 in the third quarter last year.
And the average U.S. credit card balance rose 7.6 percent to $7,539 per household during the third quarter, Synovate said.
— Nicole Garrison-Sprenger






Well, I know we have been talking about this at the Post office, seeing a drop in first class mail/credit card offers. And the irony is that as the credit card companies are pulling back on their offers of credit lines the catalog advertisers are flooding us with their product, which is based on the availability of credit cards.

I know that there has been an ongoing offer to get a Postal credit card, Visa I think, which I have returned approx. two dozen said offers with 'refused - stop sending' written in felt tip on the front. Now, maybe they will stop sending.

Myself, I have paid off all credit cards and will only use my Discover for gas purchases to avoid having to go inside, and my Visa that is dedicated to Internet activity, such as game subscriptions and Amazon/Itune purchases. I am back to writing checks, heh.

Well apparently Citibank, Discover, and Mastercard still feel the need to inundate me with their mail. I'm still getting shit tons weekly.

My wife and I still get several offers a week as well.

You have good credit. The cuts are probably at the lower end of the spectrum. I just got an offer for 0 percent for 14 months from Capitol One. Bought 13 windows for $6,500 and put that cash into a CD for 5 percent interest.

As long as you use them responsibly, lines of credit can still be amazingly useful and profitable.

I get two or three a year on LifeLock's "don't send me mfer credit cards!" service. It's been nice.

You have good credit. The cuts are probably at the lower end of the spectrum. I just got an offer for 0 percent for 14 months from Capitol One. Bought 13 windows for $6,500 and put that cash into a CD for 5 percent interest.

As long as you use them responsibly, lines of credit can still be amazingly useful and profitable.

The problem with this is that you think you're being clever, when you're actually taking a risk that is difficult to quantify. Putting money into something like a CD, betting on nothing going wrong with a 0% offer, is a gamble.

In fact, that's why we're in this entire economic mess. Thousands of people thought they were being clever and getting into sure investments, which were in fact large gambles.

Taleb's Fooled by Randomness and The Black Swan both have interesting discussion about this phenomenon of how stupidly we evaluate risk.

Some might have a problem with reading the paperwork coming with a credit offer, but luckily I'm not a total moron :-)

To be honest, I don't have the luxury of not having every penny I make work for me as hard as it can. Four years ago when I started my company the first few months were extremely difficult and downright brutal to me financially, and the year prior I wasted a lot of my savings being underemployed and living above my means.

Just 6 months into Chad Horn, LLC I had only $200 in my bank account, $600 was due for rent, $1500 in invoices were out but unpayed. I was ready to throw in the towel but my mom floated me a $500 loan and 2 bags of groceries to hold me over.

Today, 3 and a half years later, I own over 20% equity in my new house. I paid cash for a "new" (new to me, at any rate) car. I was able to replace all my windows in my house, making it a lot more energy efficient. I bought and paid for numerous equipment advances for my company and have been able to quadruple the size of my business. All the debt I have not counting my mortgage (which gets paid for me every month by my 3 roommates, it doesn't cost me a dime) and some student loans ($12,000 at less than 1% interest rate that is automatically deducted somewhere around $50 a month from my checking account) is just a little over $6k for my windows and probably $2k worth of expenses for just this month easily covered by my income.

Without over-managing every penny of my money I wouldn't have gotten here. And to be honest, it wasn't really hard - just took some paying attention to. Maybe a guaranteed 4.5% interest on $6,500 compared to a 0% interest rate for 14 months is a crazy skydiving-without-a-parachute or sex-in-northeast-DC-without-a-condom type of risk, but it has worked for me in spades. Even if tomorrow all my clients tell me to fuck off, I've got plenty of equity in my house as well as 6 months expenses in the bank account. Doesn't seem that risky to me given the considerable gains.

I had a good friend from high school who just lost his house (and six figures worth of equity in it) due to playing these leverage games. Last year, he was profiting in the high six figures from his company. This year it's back to square one.

That's almost always what happens when you get addicted to the leverage based growth. If you look at the financials of the first companies to fold in each industry right now, they're all the ones playing those games.

Like anyone else who beats the house for a few hands, I'm sure you think you have it all figured out. No different than the people who were telling me how it was stupid not to sink money into a spec house a couple years ago, because it was such a fool-proof money maker.

The key is to know when to slow down and play it more conservatively. This is absolutely one of those times.

But Sanchek, you've never once cited in a real life example of how that's possible - you just paint doom and gloom and steal my vCash.

Your card probably has a universal default clause. Miss a payment on anything anywhere that reports to your credit, even in error, and your 0% turns into 20+ overnight. What's the early withdrawal penalty on that CD? Yeah...

The more leveraged you are, the more likely you are to fall victim to a cascading effect of relatively small problems.

It's pretty easy to end up there accidentally, without having been grossly negligent. The important thing is to understand that these things are risks and to treat them as such.

It's sad when we've become so accustomed to unrealistic growth patterns that suggesting you consider playing things conservatively is "doom and gloom". That's exactly why we're in this over-leveraged catastrophe right now.

Like I said, I have 6 months of expenses in the bank account earning 3%. I also don't think anyone is that dumb that they'd put all of their money into a CD. My biggest problem is theft of vCash!

I can see how people can screw themselves, but to fear these tools without trying to understand them is just putting yourself at a disadvantage over the rest.

I can't remember if I posted this anywhere but have you heard about App-o-rama? It is crazy!

Now that I type it i seem to remember typing it before...... hmmm maybe I'm on that LOST island?

My biggest problem is theft of vCash!



OK, look. Most who bet on a game watch the results to see if they won. You would have clearly seen the Ravens covered the spread by 1/2 point, meaning you lost the bet. That there was an accident in checking the boxes which inadvertently awarded you money as a winner is not Sanchek's fault (OMG, I am sticking up for San).

But, the fact is that you placed a bet using money that should not have been in your account. That money was removed from the bet, leaving a bet of 500 rather than 1500, giving you a winning of 500 + 500 for 1000. It is no different than the person who receives a tax refund with an extra zero, and spends it, and then finds the government wanting it back. Who is going to win in that scenario? The recipient knew what the correct amount of their refund should have been.

So, enough already with the vCash. And good luck next Sunday. :)


edit: your comments from the Sunday in question, showing you had watched the scores:
Yeah, my 500 was the other half of that bet. Honestly, Redskins should have manhandled the Lions, and I really thought the Raiders were gonna do a lot better than they did against the Ravens.


BTW, I remember some of your comments four years ago, and I applaud your success over the ensuing time to get where you are today.

I can see how people can screw themselves, but to fear these tools without trying to understand them is just putting yourself at a disadvantage over the rest.

There's the problem again. You're viewing gambles as "tools".

Without accurately identifying risks, you can never measure them. Taking a string of unmeasured risks is the best way to crash and burn.

It is no different than the person who receives a tax refund with an extra zero, and spends it, and then finds the government wanting it back.

Hmm, maybe I should've assessed penalties.

There's the problem again. You're viewing gambles as "tools".

Without accurately identifying risks, you can never measure them. Taking a string of unmeasured risks is the best way to crash and burn.

Doh! burn!

Like I said, I have 6 months of expenses in the bank account earning 3%. I also don't think anyone is that dumb that they'd put all of their money into a CD. My biggest problem is theft of vCash!

I can see how people can screw themselves, but to fear these tools without trying to understand them is just putting yourself at a disadvantage over the rest.

Keep saying that...

I said it was a mistake and would be fixed. You knew it a little under a week before Sanchek made the correction.

I'm sure you are kidding, but you've referenced the same thing in this thread twice within two posts, and you complained about it on the sports forum. You knew the correction was coming. Quit complaining. Mistakes happen. It wasn't theft, it was the fixing of an error you knew unjustly 'enriched' your vcash amount.