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 their business.

Some marketing tactics are:

• Teaser interest rates, low beginning rates
• Balance transfer offers, low rates, zero interest
• 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.