Over Trusting

Interesting story on a new kind of credit card that preys a little less on customer's than others. Eliminating late fees and penalty rate for late payments are more tweaks than a complete re-thinking of how credit card companies make money and what they are in business for. While the author suggests that the move is about building customer trust, I would tend to be skeptical about that. 

To me it seems to be more about differentiation. Rewards, miles and cash-back offers is what everybody else is competing on. It is harder to get noticed by doing more of the same - to entice a switch it would take a deal so spectacular that it is no longer a profitable business decision. The idea here to eliminate some pesky fees and usurious interest rates is a very smart one for sure. It gets the customer's attention and there is the first mover advantage. The marketing company behind it calls it for what is really is

1 comment:

ggop said...

Chuckled at the "patented late fee waiver" phrase in the case study summary link!

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