Credit Card Applications Decline at Top Issuers
Study shows the number of online credit card applications declined…
A leading company that provides a comprehensive view of changes in consumer spending, usage and loyalty in light of the current economy, as well as trends in online and mobile banking, comScore, Inc., recently released the results of a study of the online credit card industry. The data is based on a survey conducted in September 2008 of more than 2,000 online users and passive bahavioral online observations compared to results from the April 2007 comScore credit card survey. The study reveals that the total number of online credit card applications at the top ten credit card issuer sites declined - dropping 6% in the second quarter of 2008 compared to the same period in 2007. The issuers who were examined included Wells Fargo, Washington Mutual, US Bank, HSBC, Discover, Citi Bank, Chase, Capital One, Bank of America and American Express prior to any recent mergers.
The decline is largely due to a 19% drop in applications among prime consumers, those that have a FICO score of more than 660. Application rates among subprime consumers (those who have a FICO score of less than 660), have increased by 7%. The survey also found that 67% of the respondents would consider switching their primary credit card, if better features were offered by another credit card company. In addition, 52% would switch for a lower interest rate offer and 38% would change for better reward options.
“With historically-low consumer confidence, a tight credit market and looming uncertainty in the marketplace, it’s likely many consumers are doing all they can to avoid having to take out additional lines of credit. We see that prime candidates have become particularly cautious during this time, while subprime candidates remain relatively credit-hungry,” said Jennifer Lanouette, comScore vice president. “Regardless of these shifts in consumer behavior, it’s important for credit card issuers to realize they can still compete for new customers by appealing to those looking for better rates, card rewards and service options.”
Despite the changes in credit applications in a depressed economy, the Internet flourishes as a channel for consumers to connect with lenders and vise-versa and continues to grow. The survey reflects this trend with nearly 75% of respondents saying they have logged onto a credit card website - up 4% compared to April 2007. In addition, online banking continues to grow in popularity and is the fastest growing mobile web category during the last year.
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