Credit card offers getting worse

Bruce Wayne · #1 (**permalink**) 08-26-2005, 12:46 AM

Consumers have witnessed a growing trend of credit card providers withdrawing the benefits and perks previously offered with their deals, and more are doing the same.

Sainsbury's Bank is the latest to withdraw its cashback and reward schemes, in a market which has found it harder to turn over profit since the advent of zero per cent interest offers.

Full story

Why do you think credit card providers are doing this? Won't it erode their competitive advantage?

cicy33 · #2 (**permalink**) 08-26-2005, 09:38 AM

Quote:

Originally Posted by Bruce Wayne

Why do you think credit card providers are doing this? Won't it erode their competitive advantage?

Not really, as long as there are people that will apply for the card for the opportunity to spend now and pay later, there will be no shortage of applicants. What will probably happen is that there will be lower requirements to get the credit eventually.

CRFSaver · #3 (**permalink**) 08-26-2005, 10:06 AM

There is a ton of consolidation in the Credit Card market right now. After the MBNA, Metris and Providian mergers are complete, the top 10 credit card issuers (US Domestic) will control over 90% of the market. With that consolidation comes less competition many times. Should be interesting to see the Bank of America/MBNA merger as there is somewhere in the range of 40% overlap.

In the UK, credit quality has been deteriorating quite rapidly over the last year which might explain why credit card companies have stopped offering these reward plans. I dont have the charge off numbers for the different trusts so it is hard to say.

A lot of the credit card companies are moving to a "premium" card structure in order to pay those rewards. That means merchants get charged a slightly higher interchange. You as the consumer will never know that though.

Card growth has slowed and is only growing at around 2-3% right now. Teasers still make money for them given that most people mess up and lose the teaser rate anyway. Also, on the zero% balance transfers, if you continue to use your card, all your payments go to paydown the zero percent balance first.

jmjj215 · #4 (**permalink**) 08-26-2005, 11:49 AM

Is there any correlation to the new bankruptcy law?

moneyrant · #5 (**permalink**) 08-27-2005, 05:13 AM

They were ever good?

CRFSaver · #6 (**permalink**) 08-27-2005, 12:19 PM

well if you compare how credit card offers were 20 years ago the ones today are amazing. Ask your parents what it was like to get a Credit Card back in their days and even more if you had terrible credit.

cercis · #7 (**permalink**) 08-27-2005, 02:46 PM

Quote:

Originally Posted by CRFSaver

well if you compare how credit card offers were 20 years ago the ones today are amazing. Ask your parents what it was like to get a Credit Card back in their days and even more if you had terrible credit.

In many ways it's too bad those times changed. I did collections work for citibank and really felt that they shared equal responsibility for the bad debt. Why on earth would they give someone who worked parttime at walmart a $20k limit? That's more than that person made in a year (and I saw the application, they were completely honest about their job and the money they made).

Credit used to be difficult to get. Now they give it to animals (yes, really, there are documented cases of pets being given credit cards when the owners very clearly and honestly indicated they were pets on the application).

This doesn't excuse the people who abuse it, but I do think that responsibility is a two way street.

niki_the_tiger · #8 (**permalink**) 08-27-2005, 09:19 PM

Yeah I agree about the credit card companies being partially responsible. I mean... often times they go and increase your limit without you asking them to. Each time, we fully intend to call and cancel, but then we're like... what if something comes up, it will be good to have that extra credit limit... let's not touch it except for emergencies... then oops we buy this, then buy that...

Of course, it's still OUR fault... it is our responsibility. But if the credit card companies didn't do that... we would be less likely to spend that much.

cercis · #9 (**permalink**) 08-27-2005, 11:53 PM

Niki, it's like the chocolate analogy. Having chocolate around makes it hard to resist. The more you are around it, the easier it is to rationalize eating it and to actually do it.

I think cc companies know this, but they also know you'll pay interest and fees up the wazoo and they'll actually get more from you than you spent.

niki_the_tiger · #10 (**permalink**) 08-28-2005, 08:12 AM

Yes, it's the fact that they know it, and use it against us, that I feel makes them partially responsible. Though that still does not excuse the fact that we gave into it. We must be smarter then them! Hehe

cercis · #11 (**permalink**) 08-28-2005, 07:09 PM

Honestly? It makes me think tough for them when someone defaults. If I loan money to a friend without a job, then no one will pitch a huge fit on my behalf when they don't pay it back. They'll commiserate with me and then remind me that I knew the person didn't have a job and really shouldn't have expected to be paid back anyway.

dealsaver · #12 (**permalink**) 10-13-2005, 02:52 PM

Quote:

Originally Posted by Bruce Wayne

Consumers have witnessed a growing trend of credit card providers withdrawing the benefits and perks previously offered with their deals, and more are doing the same.

Sainsbury's Bank is the latest to withdraw its cashback and reward schemes, in a market which has found it harder to turn over profit since the advent of zero per cent interest offers.

Full story

Why do you think credit card providers are doing this? Won't it erode their competitive advantage?

Credit card rewards and perks have always been always been a moving target. You just have to change with the times and have the best card for the moment and realize that part of playing the game is occasionally losing rewards do to a change in terms or the withdrawl of a particular card from the market.