Creditors have begun extending credit to excellent credit card customers, also called “superprime” customers, as evident in the increase in credit card offers being delivered to the homes of these consumers.

In fact, credit card promotional mail volume rose 34 percent between September and October, which equals about 180 million pieces of new mail. This level is the highest it’s been since December 2008. It was also the largest month to month increase in credit card promotional mail volume since 2004.

Lower Credit Card Defaults Equal More Lending

The industry has begun to see a small drop in credit card defaults over the last two months, which may have banks breathing a little easier and offering to extend credit a bit more.

As credit card companies begin to spend more for their marketing efforts, many analysts see signs of credit deterioration beginning to subside.

It’s still important, however, to note that total credit card promotional mail volume is still down a whopping 74 percent from this time last year, which is the lowest level in 10 years.

Affluent Customers Only, Please

Only the most affluent customers will likely see an increase in credit card promotional mail, though, as credit card companies are expected to target only those customers with excellent credit histories and large incomes.

The two largest increases were seen from Chase and American Express over the last two months. Much of this activity from JPMorgan Chase & Co. is due to the release of its newest card, Sapphire.

American Express continues to aggressively compete with Chase to capture the wealthiest of customers, as seen by its increase in marketing spending – nearly $150 million more in the third quarter than the second quarter. American Express notes that it will continue to increase its marketing efforts as loan losses decline.

Credit card companies are also pulling out all the stops with their rewards programs in an effort to snag the affluent sector of the market.

Retail credit cards certainly have their share of advantages and disadvantages, so what might be right for one consumer may not be right for another.

Let’s compare the two:

Advantages of Retail Credit Cards

• Instant approval – There is nothing like being able to purchase items from your favorite retailer when they are able to approve you in just minutes.
• Instant discount – Many retailers offer customers additional incentives for applying for instant store credit by discounting the day’s purchases.
• Future coupons/discounts – Many retailers, in an attempt to lure their customers back into the store send them coupons in the mail, usually along with their statement.
• Special promotions/events for card holders – Another ploy of retailers to get their credit card holders back into the store is to offer card holder-only promotions and events.

Disadvantages of Retail Credit Cards

• High interest rates – It is important to realize that, along with the convenience, comes high interest rates. Over-the-limit fees and late-payment fees for retail credit cards can be quite high, as well.
• More credit – do you need it? – The real question when deciding upon a retail credit card is, “Do I really need another credit card?” For many consumers, a standard credit card with a low interest rate may be a much better option than opening yet another credit account.
• Impulse buys/overspending – Perhaps the biggest reason that many consumers avoid retail credit cards is that they often encourage impulse buying and overspending, Sometimes it is all a bit too tempting to walk into a retailer and buy more than we need, simply because we come armed with our store credit card. Consider whether you can make responsible purchases with a retail credit card before applying for one.