Online Stock Trading - Credit Card's Paying People to Go Clear Their Debt
Credit Cards Paying People to Go Away
Once upon a time if you had a large outstanding balance on your credit card and only paid off the minimum each month then you were seen by the credit card companies as being the ideal customer. How times have changed. Now they are trying to get rid of such 'excellent' customers, who have often taken out a balance transfer deal at a very low lifetime rate.
Defaults on credit cards are rising and as a result credit-card issuers are coming up with new rewards and a new take on cash-back to encourage clients to pay off their balances and, in the best-case scenario cut up their cards and send them back.
American Express for example is offering some customers a $300 gift voucher if they pay off their balance by April 30. Citibank will match a part of any payments made by some cardholders over and above the minimum amount due.
Chase on the other hand is doing the opposite - they are adding a $10 monthly fee to accounts who have had a large balance for longer than 2 years.
The reasoning behind this strange behaviour by the masters of the credit card universe is that they believe that by reducing the liabilities of their credit card holders they will reduce possible problems caused by the increasing number of people defaulting on their credit cards and because "it's become increasingly difficult to collect", says Tom LaMagna, Director of Auriemma Consulting Group, a payments and lending specialist.
"When the economy was really booming, we were seeing a lot of 0%, low-rates-for-life [on credit card] offers because the industry was profitable overall. Now they can't afford to keep them on the books, as good as that customer may be."
These new deals only seem to be being offered to US credit card customers at the moment and the details of each individual deal are quite complex and you would need to read teh fine print very carefully if ever you were offered such a deal, but nevertheless it is a strange and interesting development in the credit card universe that we have never seen before.
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