Ever notice how your mailbox seems to be flooded with credit card offers every week? If your residence is like the average U.S. household, you probably get dozens of credit card solicitations in the mail each year. To put an end to them, simply call 888-5-OPT-OUT or go online to www.optoutprescreen.com.
The toll-free number I’ve given you, 888-5-OPT-OUT is an automatic phone service that’s run by the four main credit reporting agencies: TransUnion, Experian, Equifax, and Innovis. (Many of you may be thinking: “What is Innovis?” I’ll tell you more about that company – and the credit report you’ve probably never even heard of – later, in Day 4. For now, though, let’s stay with this OPT-OUT number).
The reason this number works is because it takes you out of the credit bureaus’ databases for pre-screened mailings. This will force the credit bureaus to stop selling your name and address to banks and other institutions that send you credit card offers each month.
Research companies and public-interest groups, such as the Consumer Federation of America in Washington D.C., track the rate at which banks and other credit card issuers send out credit card offers. What they’ve discovered is that some six billion credit card solicitations are sent to people like you and me every year. Imagine that: a whopping six billion credit card offers, or roughly 60 per U.S. household! And the numbers keep rising every year. According to the Mail Monitor report from Synovate, a Chicago-based research company, 90% of credit card mail comes from the 10 largest credit card issuers. If you’re wondering why in the world banks send out so many darned solicitations, the obvious answer is because they’re hunting for new clients. But the less obvious reason is that financial institutions are also responding to changing customer demand. When interest rates rise, banks often increase their mailings because with higher interest rates, people often start looking for fixed rates products on things like credit cards and mortgages. As a result, consumers are more likely to be receptive to new offers for credit. Still, if you’re like most people, you probably tend to give credit card offers the cold shoulder – perhaps tossing them in the trash can without even opening them. That’s why the average response rate to credit card solicitations is miniscule – just 0.2% in 2006 – a record low, according to Mail Monitor and other industry trackers. For all the mail being sent out, direct mail doesn’t seem to be the most profitable way for credit card companies to do business. For starters, they have to send out more than 250 solicitations just to acquire one new customer. That means up to $200 spent to attract every new cardholder.
Five Reasons to Opt Out of Credit Card Offers
No matter how many tantalizing credit offers banks dream up, you can minimize the clutter in your mailbox, thanks to the Fair Credit Reporting Act. This law permits you to opt out of pre-screened credit offers, thereby greatly reducing the amount of “pre-approved” credit offers that come to your home.
It’s worth it to opt out of getting these pre-approved offers, for many reasons.
1. For starters, you’ll keep yourself from going deeper into debt by limiting the number of credit cards you have.
2. Additionally, you’ll protect your credit score, because every time you apply for a new credit card, an “inquiry” goes on your credit file.
3. Reducing the number of credit card solicitations you receive can reduce your risk of being victimized by identity theft.
4. By opting out, you will also save yourself the time and effort of having to deal with so much junk mail day in and day out.
5. And last, you’ll put an end to being frustrated by credit card companies that ultimately decline your application or turn you down for the amount of credit they originally used to tempt you.
For example, have you ever received a credit card offer in the mail, promising you “up to $20,000?” Then when you finally take the bait, and go ahead and apply for the blasted card, you wind up getting approved all right – but the limit is more like $2,500 or $5,000. If you ask why you didn’t get the $20,000 limit or whatever was originally indicated on the credit card offer, the bank’s reply will always be the same: “Our decision was based on your credit history and current credit use.” Sure it was. But they had a sense of your credit history when they first solicited you. You fit a certain profile, and that’s why they made you the offer in the first place. So who needs that kind of tease – only to be disappointed? Do yourself a favor, and instead of getting frustrated with this system, opt out instead.
Next: Day 1: Stop the Flood of Credit Card Offers (Part 2)
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