Credit Card Industry Marketing Tactics
It’s important to understand that credit
and lending money is big business. It makes big
money and carries a fairly large risk to the creditor.
As such there is technique to the marketing of
credit cards. We have become a country dependant
upon credit, and credit cards, which can have
negative effects in the long run. Most of the
original credit card issuers have sold or transferred
their rights to other companies. Some have simply
changed hands, till others are actively marketing,
through direct mail and advertising to increase
Some marketing tactics are:
- Teaser interest rates, low beginning rates
- Balance transfer offers, low rates, zero
- Co-Branding, stores brand cards
- Direct mail marketing campaign
Many card issuers now offer a broad range of
plans with differing rates depending on credit
risk and consumer usage patterns. Risk-based pricing
makes credit cards available to consumers with
less-than-perfect credit histories, but also makes
the credit more expensive for some consumers.
Many issuers have also moved to variable-rate
pricing, with rates that automatically adjust
with changes in the market. A general decline
in credit card interest rates from mid-1991 is
the result of many factors, including a sharp
drop in card issuers' cost of funds and greater
competition on this aspect of credit card pricing.
For quite a few years now money has been fairly
cheap however the cost of money is rising and
the really cheap deals are starting to disappear.
Today, credit card interest rates are averaging
about.15%, and climbing.