BALANCE TRANSFERS: BEST PROSPECTS ARE CURRENT CUSTOMERS

Balance transfer offers have been most effective when targeted at an issuer’s current cardholders, according to a recent survey by SYNERGISTICS Research entitled, Credit Card Marketing Strategies.  One in six cardholders indicate they transferred a balance from one card to another in the past year.  This activity has been widest among 18- to 34-year-olds, narrowing with increasing age.  It also tends to widen with household income.  Most of these respondents, three-fourths, indicate that this balance transfer was in response to a promotion received.  Interestingly, most of these report that the promotion was from a current credit card provider; one-third say that the offer was from a new provider.

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William H. McCracken, CEO of SYNERGISTICS, stated, “Credit card balance transfer offers were once a very prevalent marketing tactic used by card issuers to attract new customers and shift market share.  Activity significantly declined during the recession and credit crunch but is now beginning to revive.  In a twist, our study indicates that much of the balance-transfer activity today involves credit cards already held by consumers rather than promotions for new credit cards.  Issuers are meeting with success by employing balance transfer offers to strengthen relationships with their most creditworthy customers and possibly gain additional income from fees associated with balance transfers.  To a lesser extent, card issuers may be able to attract new customers with balance transfer offers.  Given that recovery in the credit markets will continue, balance transfer programs are likely to become even more widespread.”

These are among the findings from SYNERGISTICS study, Credit Card Marketing Strategies, featuring 1,001 national Internet interviews with consumers age 18 or older.  This study examines consumers’ credit card activity with an emphasis on factors that may impact account acquisition and retention – pricing, rewards, value-added services, and customer service.