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Lenders Looking for Commitment

Are you ready to stop playing the field and settle down? Your lender sure hopes so. After years of wooing customers with rock-bottom teaser rates and mountains of tempting solicitations, credit card issuers are looking for a commitment.

Courting fresh customers has become too costly. Cardweb.com says that issuers spend anywhere from $80 to $200 to land a single new account. Lenders are dumping (or at least reducing) direct-mail solicitations. A report in the Dallas Morning News found that in 2000, companies had to send out 167 solicitations to elicit one response. By 2002, companies mailed 200 solicitations to get one response.

What else is going the way of the dodo? Low, low introductory interest rates and lengthy balance transfer periods are becoming rarer niceties. Less than half of mailings offer 0% introductory APRs, and the average balance-transfer period has dropped to 11 months, Mintel Comperemedia told the News.

So what's a gal to do? Lenders are pulling out all the stops to earn your loyalty. If your bank isn't giving you the warm fuzzies (or at least some cash back), find a better mate at a particular retailer -- such as Amazon.com (Nasdaq: AMZN  ) -- or via some brand with which you feel a kinship. (I just love it when people ogle my Motley Fool Visa!) There's never been a better time to find a perfect plastic match. Almost half of bank credit cards have some type of rewards program attached, says Cardweb.

If you're chasing low interest rates to pay off a balance, it behooves you to plan to pay it off quickly before the well dries up completely. Besides, card hopping isn't good for your reputation. Having a lot of open accounts -- or applying for too many at one time -- has never been very flattering on your credit report.


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