Amazon’s View of the Credit Crunch

So how significant is the “credit crunch”?

You can get whiplash reading dissenting views on the subject. Consider just this post from Marginal Revolution, a response to (inter alia) this post — from the same Marginal Revolution blog.

I will leave the macro implications of the credit crisis to the economists. But if you’re looking for signs that consumers are feeling the pain of constricting credit, you might want to take a look at the e-mail below that I recently received from Amazon.com. I cannot say that I’ve read every promotional e-mail that Amazon has ever sent me, but I certainly don’t ever recall anything like this.

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The media has been full of stories about tighter consumer credit, some of them more legitimate than others. (Here’s a new one from today’s Times.)

Please feel free to share your own tales of the credit crunch.


Christian

Who does Amazon.com do their financing through? I expect to see a lot of furniture stores, such as Rooms To Go suffer as a result of the lack of deals like these.

paddyd

Got a wamu offer in the mail today.

0% APR until Jan 2010, no annual fee, up to 30k.....

0% cards everywhere.

Dustin

I have fairly good credit, and I'm seeing a increase in offers in the mail, but they are always from someplace that I've had some prior relationship with.

I paid 1 card off nearly 3 months ago and they now send me (no joke) a new set of 9 "courtesy checks" each week. Rates are low on these.

I wonder if the banks have some other interesting shenanigans going on that are based on credit cards rather than mortgages?

Dave

My anecdotal evidence directly conflicts with those that say they’re getting less credit offers in the mail. My wife and I are getting more credit offers than ever. We get at least 1 credit card offer per day each + at least 3 mortgage refi offers per week.

John

I have not seen the horrible credit crunch, that I keep reading about. Less than 3 weeks ago, my wife and I took out a $12,000 second mortage for educational expenses, and home improvements.

My only regret is not having waited for the interest rate to drop...

JB

Agree with the posts that say "what crisis". Last week I got an auto loan for a new vehicle purchase at 5.29% and a loan for graduate school at prime plus .5. I have moved and changed jobs in the last 12 months. It was easy, yes the banks are lending money.

The Media has over hyped the CRISIS just like they over hype everything. When the government tells the banks to lend again, what they seem to be missing is that the banks are lending now, they are lending like they should have been for the last 5 years.

DJH

Interestingly, just two days ago, a relative of mine received a credit-card solicitation. It was addressed to a completely-different relative of ours, who's been deceased for over 20 years.

Moreover, the address it was sent to, does not now and never did exist: Since this relative died, streets at that location have been renamed, and after that, the post office serving the area was switched. The address on the solicitation was to the new street name, but the old post office.

There is literally no way they could possibly have matched up the name of the (deceased) person they sent it to, with the location where they sent it. This combinations cannot have existed in any mailing-list database. (I Googled it and it didn't turn up anything that would have worked -- certainly not a fancy Maps link.) This could only have happened if someone researched it and synthesized past information on this specific area with the present time; or perhaps some agressive data-mining might have synthesized it.

I have to give the USPS credit for figuring out how to deliver it. By all rights, it should have been returned as a non-existent address, but someone in the post office figured out a place it might go to, and delivered it there.

Either way, someone went to some effort to figure this out and mail a solicitation to a 20+ year dead person at an address that doesn't technically exist. Somehow, I can't view this as a sign that consumer credit is tight; if it were, the company wouldn't likely have gone to such a research or data-mining effort.

FWIW, if anyone cares, the dippy company that sent this out was Capital One ... the bank of "Huns" fame.

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paddyd

I got 30k last week from my BofA card at 3% fee (0% for the next year and change). Figured why not if I can put it into a bank account at 3-4%. Chase is offering cash advances at 0% for a year or 3.9% for as long as it takes to pay it off.

BofA is offering 0% cash advances on all their new cards up to the credit limits. Chase is offering 12 months 0%apr new credit cards. Discover card offering 0% cash advances on their cards, shorter terms.

It's amazing how many people have passed along that NYT story without just checking what the credit card companies are pushing on their web sites. The tighter credit card credit stories fit the larger narrative in the zeitgeist -- it's so much fun to report.

This isn't targeted one-offs or accidents. The consumer 0% offers are occupying a lot of promotional slots. It's a deliberate wide push.

There's so many consumer 0% offers of one kind or another in the last few weeks that the reality is probably something quite different from that NYT article.

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paddyd

there's something funny about this "credit crunch".

it's like this twilight world where large companies and banks seem to be having problems and the newspapers are all proclaiming doom, but if you actually need money on a credit card, or an auto loan, or a small business, you can get it and the interest rates are not only reasonable, but downright good.

if consumer credit were drying up, we all wouldn't all be pointing to one nyt article as the web is today. it'd be obvious, it'd be reported first-hand by reporters everywhere. So I don't think it's true once you look beyond the surface.

Better By Design

#6: I too have noticed a staggering decline in unsolicited credit card offers over the past 2-3 months.

In olden times I received 1-2 a day; always 5+ a week.

Last week? One.

Anyone else notice this?

bob

I have three credit cards, and one allows me to get $20,000 at 0% (with a 3% finance fee) for one year. Then it reverts to 13% the regular purchase rate.

The other has a $12k offer, with a $99 finance fee. I in fact used this to buy a used car, and plan to pay it off in one year.

steve pesce

Thank Biden. He's one of only two Democrats who voted for the 2005 bill to make it impossible to charge off credit card debt even in bankruptcy. He also took more money than any other candidate from credit card companies. That's why Nader calls him MBNA's candidate. And Biden's son, until a few weeks ago was on MBNA's payrole as a lobbyist.

RW

#8

I just returned from picking up my mail and thought the same exact thing on my walk back.

I used to get 4-6/week but I haven't had one all week and only one last week. What part of the 700 billion was set aside for mass mailings of credit offers? :)

Neil

It's the weirdest thing with credit. My interest rates have dropped A LOT since this crisis began. My credit card company recently offered me single digit interest...something totally new for a card. (Still too expensive for my taste, so I don't carry a balance, but better than the 30% I've heard of some people paying).

I still get lots of offers for more credit, cheaper credit. Everyone seems to be trying to stimulate their business by making it easier to buy on credit from them. So, on the consumer end, there is no credit freeze as far as I can tell.

Maybe it's become harder for marginal borrowers, something that would be good for stability going forward. But as someone who's never missed a payment and has some savings (though less now thanks to the stock market collapse), I still have enough credit available to me that I'd have to throw myself off a bridge if I spent even 1/3 of it.

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Brian

I've noticed a substantial decrease in unsolicited credit card offers in the mail. For years, through this past summer, either my wife or I (often both) would get offers almost daily. For the past few weeks that has dropped to only one or two offers per week.

james

I've been noticing the same thing my self... many commercial entities are now supplanting their usual ad campaigns with "oh btw, we're still able to extend you credit". Subtly at the end of a more recent Caddilac Ad, but also on billboards for Provident Bank "We're still lending!" they proclaim.

Is it just another gimmick to take advantage of the current zeitgeist or an actual indication of the state we're in? For that matter is their a difference at this point?

sinda

This just makes me want to buy that lens I've been coveting...wait, have I been manipulated?

Graham

No interest or payments on wedding dresses from Priscilla's of Boston for 12 months.

cak

Is this about the credit crunch or the lack of consumer demand? I honestly don't know how you intend the question at the beginning of the post to be taken. The e-mail seems to say to me that there is plenty of credit there for the taking.

Witty Nickname

I thought this was funny, as a result of Hurricane Ike my refrigerator was ruined (the power surge killed it). It was 15 years old and I decided to just get a new one instead of fixing it. I went to a large home store and used my store credit I have had for a long time. With tax my new refrigerator, and a chainsaw, (I had a couple downed trees) was something like $1528. A week later before I got my first bill I got a notice from the store that my Credit limit had dropped from $2,000 to $1,500. In a separate envelope on the same day I got a notice that I was over my limit and I would be charged an extra $50.

One phone call got an apology and they took away the fee, I just thought it was funny. Wouldn't have been as funny if they had dropped my limit before the hurricane and I was unable to buy a refrigerator..... (Because Insurance and FEMA are SO SPEEDY at getting you checks)