Credit Card Offers with no Balance Transfer Fee Profitable for Banks?
Guest: Bikshu
Credit Expert (100+ Posts)
Post subject: Credit Card Offers with no Balance Transfer Fee Profitable for Banks?
Posted: Fri Sep 22, 2006 12:36 pm
Nope, not in the least. By now most folks have caught on to the payment allocation problem and keep their cards strictly for the promo rate. This is by no means a law, there are still certainly many people that do shield balances. But it is by far the trend on the vast majority of our BT'd accounts, thereby minimizing that opportunity to earn a profit.
Also, not enough people "botch" up their BT's to override the loss. And when most people do lose their promo rate, that balance is then BT'd away to another bank's promo rate usually within one or two months absolute max. So banks don't have enough time to earn back a profit through screwups either. Honestly, I never would have believed this either until I started working for the bank and actually seeing the profit/loss amounts on thousands of different accounts... both those with promos and those without.
No the reason promo rates are unavoidable for banks is that people have literally come to 100% demand them. If a bank refused to offer BTs across the board, their market share would plummet toward nil in no time. The ultimate hope is whether one screws up their promo or not, they will eventually use the card at some point down the road for retail and earn the bank some decent revenue that way. Offering promo rates is like offering a rewards program, extremely costly, but simply unavoidable in today's marketplace. It has become a necessary evil, like any and every other form of advertising.
CardRatings.com is the most comprehensive source for comparing credit card offers. Please visit CardRatings.com to view the best rated credit cards!
Guest: crybaby
Posted: Fri Sep 22, 2006 5:52 pm
I doubt neither your knowledge or experience, but it seems to me that it would be in the lenders interest to apply payment to the highest interest debt first so that after I made my fat BT, I could still use the card.
Likewise, issuers could then extend your promo rate duration based on how aggressively you used your remaining available credit. This would induce both loyalty and transactions.
Also, if you are correct (which I have no reason to doubt you), we may see the end of these types of promos in a similar fashion to how CITI is leading the retreat from 5% Cash Back Rewards.
_________________
Reality only hurts when you accept it!
CardRatings.com is the most comprehensive source for comparing credit card offers. Please visit CardRatings.com to view the best rated credit cards!
Guest: multiplierx
Credit Expert (100+ Posts)
Posted: Fri Sep 22, 2006 8:49 pm
Bikshu wrote:
Believe it or not that's the first picture I've seen of the BOA Visa Signature WorldPoints card. It's pretty slick looking if I do say so myself.
If you do run into any problems with the conversion, just sit tight for another month. Once we take over you won't have to worry about affadavits or back offices. We will simply submit what's known as a CSI (Customer Service Inquiry) to a department known as the PCU (Product Change Unit). The conversion will take 2-3 weeks, and you can cut up the old card once you receive the new one. The CSI submission is an incredibly easy process that any MBNA CSR can do within a minute. After all, there's a reason BOA bought us in the first place...
In the meantime, if you were doing this upon my recommendation than I apologize for your troubles. If I had realized you had a BOA card rather than an MBNA card, I would have recommended that you wait out the month. The CSR was likely doing the best she could, but that is truly a tricky request for the pre-integration BOA side to handle. Sorry 'bout that...
Yes it's an attractive card. Most BOA have been pretty ugly.
I didn't see your post on the Visa Sig but I'll look now. I have a MBNA card too, since 1996(former Wachovia)
CardRatings.com is the most comprehensive source for comparing credit card offers. Please visit CardRatings.com to view the best rated credit cards!
Guest: Ira
SENIOR MEMBER (Member for 2 yrs.+)
Posted: Fri Sep 22, 2006 9:18 pm
I had an MBNA Platinum Plus card and lo and behold, a replacement BofA VISA Signature card shows in my mail! I haven't been using the MBNA card which has a zero balance so I figured what the heck. When I called to activate the CSR asked me if they could offer an attractive rate on BTs which would save me $$$; do you know what rate you're currently getting? Yes, says I, 0%. OIC he says; never mind. The card's going back in the drawer anyway, so I can't answer any questions as to how good or bad it is. All I can tell you is that the CSR was as helpful and polite as any MBNA CSR has ever been with me, and that's a high compliment.
_________________
Do not let what you cannot do interfere with what you can do.
Ira
CardRatings.com is the most comprehensive source for comparing credit card offers. Please visit CardRatings.com to view the best rated credit cards!
Credit Expert (100+ Posts)
Post subject: Credit Card Offers with no Balance Transfer Fee Profitable for Banks?
Posted: Fri Sep 22, 2006 12:36 pm
Nope, not in the least. By now most folks have caught on to the payment allocation problem and keep their cards strictly for the promo rate. This is by no means a law, there are still certainly many people that do shield balances. But it is by far the trend on the vast majority of our BT'd accounts, thereby minimizing that opportunity to earn a profit.
Also, not enough people "botch" up their BT's to override the loss. And when most people do lose their promo rate, that balance is then BT'd away to another bank's promo rate usually within one or two months absolute max. So banks don't have enough time to earn back a profit through screwups either. Honestly, I never would have believed this either until I started working for the bank and actually seeing the profit/loss amounts on thousands of different accounts... both those with promos and those without.
No the reason promo rates are unavoidable for banks is that people have literally come to 100% demand them. If a bank refused to offer BTs across the board, their market share would plummet toward nil in no time. The ultimate hope is whether one screws up their promo or not, they will eventually use the card at some point down the road for retail and earn the bank some decent revenue that way. Offering promo rates is like offering a rewards program, extremely costly, but simply unavoidable in today's marketplace. It has become a necessary evil, like any and every other form of advertising.
CardRatings.com is the most comprehensive source for comparing credit card offers. Please visit CardRatings.com to view the best rated credit cards!
Guest: crybaby
Posted: Fri Sep 22, 2006 5:52 pm
I doubt neither your knowledge or experience, but it seems to me that it would be in the lenders interest to apply payment to the highest interest debt first so that after I made my fat BT, I could still use the card.
Likewise, issuers could then extend your promo rate duration based on how aggressively you used your remaining available credit. This would induce both loyalty and transactions.
Also, if you are correct (which I have no reason to doubt you), we may see the end of these types of promos in a similar fashion to how CITI is leading the retreat from 5% Cash Back Rewards.
_________________
Reality only hurts when you accept it!
CardRatings.com is the most comprehensive source for comparing credit card offers. Please visit CardRatings.com to view the best rated credit cards!
Guest: multiplierx
Credit Expert (100+ Posts)
Posted: Fri Sep 22, 2006 8:49 pm
Bikshu wrote:
Believe it or not that's the first picture I've seen of the BOA Visa Signature WorldPoints card. It's pretty slick looking if I do say so myself.
If you do run into any problems with the conversion, just sit tight for another month. Once we take over you won't have to worry about affadavits or back offices. We will simply submit what's known as a CSI (Customer Service Inquiry) to a department known as the PCU (Product Change Unit). The conversion will take 2-3 weeks, and you can cut up the old card once you receive the new one. The CSI submission is an incredibly easy process that any MBNA CSR can do within a minute. After all, there's a reason BOA bought us in the first place...
In the meantime, if you were doing this upon my recommendation than I apologize for your troubles. If I had realized you had a BOA card rather than an MBNA card, I would have recommended that you wait out the month. The CSR was likely doing the best she could, but that is truly a tricky request for the pre-integration BOA side to handle. Sorry 'bout that...
Yes it's an attractive card. Most BOA have been pretty ugly.
I didn't see your post on the Visa Sig but I'll look now. I have a MBNA card too, since 1996(former Wachovia)
CardRatings.com is the most comprehensive source for comparing credit card offers. Please visit CardRatings.com to view the best rated credit cards!
Guest: Ira
SENIOR MEMBER (Member for 2 yrs.+)
Posted: Fri Sep 22, 2006 9:18 pm
I had an MBNA Platinum Plus card and lo and behold, a replacement BofA VISA Signature card shows in my mail! I haven't been using the MBNA card which has a zero balance so I figured what the heck. When I called to activate the CSR asked me if they could offer an attractive rate on BTs which would save me $$$; do you know what rate you're currently getting? Yes, says I, 0%. OIC he says; never mind. The card's going back in the drawer anyway, so I can't answer any questions as to how good or bad it is. All I can tell you is that the CSR was as helpful and polite as any MBNA CSR has ever been with me, and that's a high compliment.
_________________
Do not let what you cannot do interfere with what you can do.
Ira
CardRatings.com is the most comprehensive source for comparing credit card offers. Please visit CardRatings.com to view the best rated credit cards!
posted by CardRatings.com at 9:10 AM
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