Credit-card mania

American Demographics, Dec, 1996 by Tibbett L. Speer, Marcia Mogelonsky

Customers like these are not ideal. And although millions of other Americans are taking on the debt that Reinders and Peterzell shun-in fact, because of it-some experts see a shakeout ahead. "It becomes a zero-sum game,' says Gordon, estimating that more than two dozen aggressive issuers are trying to post annual growth rates of more than 20 percent each. That's four times the annual growth of U.S. consumer income. "To get market share in the U.S., basically you've got to steal it,' says Brittain. "It's getting harder to find the right product for the right person,' acknowledges Rapaport of Fair, Isaac. "A lot of people have already found it."

In an effort to get more people to try their product and stick with it, credit-card issuers now offer incentives for revolving balances and are developing relationships with a wider range of merchants than ever before. You can charge everything from your groceries to your dental work. The mail remains the industry's marketing mainstay, but some offer online credit-card applications through various banks and Internet sites. This provides consumers-especially young ones-with an alternative to the scary bank and imposing credit officer of yesteryear. Applicants in a few places can key information into an interactive video kiosk and talk to a friendly onscreen banker.

Without a rainbow beckoning over the horizon, credit-card issuers couldn't summon the energy (or dollars) to maintain their competitive and innovative strategies. There is indeed a pot of gold at the end of the rainbow. It consists of the estimated 80 percent of all consumer payments in the U.S. made with something other than a credit card. Trillions of dollars flow here, and credit-card companies want more of them to pass through their hands. This means that, among other things, our mailboxes will continue to see plenty of action.

CUSTOMER VARIETY
(selected characteristics of bank-credit-card holders, 1995)

                          regular              any            Gold
                regular   Master    Sears    American  Gold
Master
                Visa      Card     Discover  Express   Visa   Card
Average age     44.4

Average household
income          $51,900  $52,000  $52,800  $73,400  $60,900
$64,300

Percent of card-
owning households
with:
Two or more full-time
earners         41.2%    40.1%    40.6%    48.0%    38.7%    39.2%

Householder with
college degree  42.8     42.0     37.1     59.3     47.1     53.0

Professional/
managerial
householder     36.7     36.4     36.8     54.0     40.4     43.1

Retired
householder     16.7     17.9     18.7     10.6     21.8     22.8

Homeowners      72.5     74.4     78.7     75.5     82.2     84.3
In home ten or
or more years   32.8     35.9     38.1     30.3     38.1     40.4

Net worth of
$250,000
or more         15.2     15.7    18.4      24.7     24.3     28.7

Source: Claritas Inc., Arlington, VA

American Express cardholders are the youngest and have the highest
incomes, while those with Gold MasterCards are the oldest and have
the greatest net worth.

PER-CAPITA CHARGES
(total credit-card charges in billions of dollars and charges per
resident, ranked by charges per resident, 1995)

                        total      per capita
rank   state            charges    charges
1      D.C.             $3.1       $5,600
2      Alaska            3.2        5,300
3      Vermont           2.9        5,000
4      South Dakota      3.0        4,100
5      New Hampshire     4.5        3,900
6      Maryland         18.1        3,600
7      Hawaii            4.2        3,500
8      New York         63.4        3,500
9      Delaware          2.5        3,500
10     California      109.8        3,500

47     Kentucky          6.2        1,600
48     Iowa              4.5        1,600
49     Alabama           6.3        1,500
50     Mississippi       3.8        1,400
51     North Dakota      0.9        1,400

Source: (arc Management Information Services and (ensue
bureau

People in D.C rack up four times more charges than people
in North Dakota and Mississippi.