Credit card companies offering perks so you'll use their cards more
We've written a lot about credit card companies lowering credit card limits and canceling cards for lack of use.
Well, I got a call from one of my credit card companies last night asking what they could do to get me to use my credit card more.
Like many people, I worry about job security, so have stopped using my credit cards. The representative from the card company asked me what is the primary thing I look at when deciding to use a credit card. Interest rate, I told him. So, he lowered my interest rate to zero percent for six months.
"We want our card to be the primary one you turn to when making purchases," he said.
I took the offer, but don't know that it's going to make me start using the card again. My goal is tostop using credit. I'm sure the credit card company is hoping that I'll make purchases and not pay them off in the six months and then they make money off of me. They also make money when I use the card off of interchange fees it charges retailers.
So are others of you out there also getting offered perks to use your credit cards more? Tell us your story.
Comments
It is definitely time to disrupt the status quo with either meaningful state or federal regulation.
The average interchange fee in the U.S. is seven times the interchange fee set by Visa and MasterCard in countries throughout the rest of the world. Using 2008 figures, if the interchange fee charged by credit card issuers was decreased (via comprehensive credit card reform legislation) from the current 2.10% to 0.60%, the result would be an annual savings of approximately $34.3 billion for U.S. merchants and consumers. Credit card issuers could retain 0.3% as a processing fee, the remaining 0.3% could be a "tax" used to fund a Natural Disaster Trust Fund (NDTF). In 2008, this would have generated $6.86 billion in funding for a NDTF.
The following article discusses how comprehensive, standardized, simplified, and transparent credit card reform legislation may fund a Natural Disaster Trust Fund.
http://www.csnews.com/csn/news/article_display.jsp?vnu_content_id=1004019107
Posted by: Brian J. Donovan | October 14, 2009 7:04 AM
I understand the Natural Disaster Trust Fund but attacking interchange fees just does not quite add up. Is there a financial motivation for Donovan to do this? His suggestion would actually be detrimental for U.S. consumers.
This is one subject I know too well. Although other countries' interchange fee is lower than the U.S., these other countries more than make up for the difference by charging annual fees to their cardholders. For example, the average cardholder annual fee for a deferred debit card in France is 120 euros per year. So, you can't compare apples and oranges.
Consumers prefer the current U.S. interchange model since they do not need to pay annual cardholder fees. Most importantly, does a consumer truly see and feel the interchange fee that the merchant pays to accept the card payment? Answer is NO.
Posted by: Nancy in Paris | October 17, 2009 4:59 AM