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Credit card attack!

So much for the end of crazy credit card solicitations -- card companies have become more aggressive than ever. We look at which solicitation techniques work and why.

Tess Vigeland: It was only about three years ago that we were doing stories about how credit offers had disappeared from the mail. The credit economy will never be the same! we exclaimed. You'll have to be the best customer ever to get a card!

Well, we see how quickly that all changed, right? True, many of the best offers are going to the lowest-risk borrowers. Folks who pay off the balance each month. And frankly they're probably not that interested in getting yet another card, which is why card companies are doing a lot of pot-sweetening.

Here's Marketplace's Stacey Vanek Smith.


Stacey Vanek Smith: Getting people with good credit scores to sign up for a credit card isn't so easy these days, especially younger consumers.

Ron Shevlin is a senior analyst at the Aite Group.

Ron Shevlin: Consumers under the age of 35, and especially under the age of 30, are very, very heavy debit card users. They don't have, let alone use, credit cards.

Credit card use has dropped by nearly 20 percent in the last four years. How are issuers responding?

Montage of credit card commercials: GET YOUR CASH BACK! Get more by choosing unlimited double miles or 2 percent cash back on every purchase every day. Don't get short changed. Get your cash back. Right now get 5 percent back at gas stations.

Rewards, and the right rewards.

Matthew Longhurst: Just looking at the card makes me want to go outside. It's black and white and it's got a climber just reaching the top of this rocky summit high above the clouds.

Seattle accountant Matthew Longhurst is admiring his new REI Visa card. He'd used the same American Express card for 10 years. But then, the avid outdoorsman heard about the REI Visa. He got a $100 gift certificate to the sporting goods store for signing up. And every time he buys something at REI, he gets 5 percent back as store credit.

Longhurst: It was definitely the store that got me. And I know there are other cards that will just give you cash back and cash is great. But this was just putting not just money in the bank, but money towards an activity that I know I enjoy.

Credit card rewards are on the rise. Bankrate.com found the top 50 card issuers are boosting cash back amounts and slashing annual fees this year. Greg McBride is a senior financial analyst with Bankrate.

Greg McBride: Lots of the marketing offers you see now revolve around pretty generous rewards. Consumers that have stronger credit are really are in the driver seat now.

Chase Bank went above and beyond to sweeten the deal for Bryn Forbes, a photographer and gallery owner in Portland, Ore. Representatives from a local Chase branch showed up at his gallery to woo him.

Bryn Forbes: They brought in little gift bags, with a stainless steel water bottle and some other chocolatey thing.

Not to mention cash. Chase offered him $250 to sign up for an Ink Bold business card -- and that was just the beginning. They gave him more money to open a business checking account.

Forbes: The business account was $100, then they wanted me to open up the personal account and get the $125. They also wanted to process my credit card for the retail sales, and I think that was $150.

All told, Chase paid Forbes more than $500 to do business with them.

Forbes: And I really haven't done anything with the account yet at all. So it's been, for their part, probably a complete waste, so far.

Maybe not, says Bankrate's Greg McBride.

McBride: An attractive credit card offer may bring the customer in the door, but the end goal is they want to have a much deeper relationship than just a one-product relationship with that customer.

Which means card companies are less inclined to jack up interest rates or lay on fees that might that jeopardize the larger relationship, says McBride.
Not that the cards themselves are a loss. Even if cardholders never carry a balance, the card company still makes money every time they use their card.

McBride: Even consumers that pay their balances in full every month can be profitable to card issuers, because every time that customer swipes the card, they're generating interchange income.

Those swipe fees typically cost merchants around 1 to 2 percent of a purchase, but for rewards cards, the fees are higher. Banks took in about $40 billion on credit card interchange fees last year. The more people use their cards, the more fees the banks get -- and the more enticing the rewards, the more people use their cards.

Longhurst: I need something that fits a nine-year-old...

It seems to be working in the case of Matthew Longhurst. He says he is buying more at REI since getting the card. He has three young daughters and wants to get them kitted out so they can go camping more as a family. He and his wife, Heather, browse the offerings at an REI in downtown Seattle. They pause in front of one of Matthew's recent purchases.

Heather Longhurst: While it may look like a dollar store plastic container, it is a bear vault and it costs $80.

The bear vault is a 12-inch high clear plastic jar. Campers seal their food in it so bears won't smell it.

Longhurst: So I was backpacking through the Olympic mountains, and a big huge black bear wandered down to within about 100 yards of where we were sleeping. And it got my attention. So $80 to keep a bear out of my campsite...

Heather: It's a bargain!

Longhurst: ...is a good investment, I think.

Especially if he buys it with his REI Visa. He'll get $4 back towards the purchase of his next bear vault.

In New York, I'm Stacey Vanek Smith for Marketplace Money.

About the author

Stacey Vanek Smith is a senior reporter for Marketplace, where she covers banking, consumer finance, housing and advertising.

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