Finally, an opportunity to use “my post is my cite”.
I have been a credit card industry professional for years. I have had roles in finance, risk management, investment optimization, and now quantitative analytics & modeling. I can attest that it is difficult to conceive how anyone in the industry who understands the credit card business could possibly call someone who pays on time a “deadbeat”. I have never heard this term in any business I have ever worked in, or even in discussion with colleages who work for other credit card companies.
That someone used it somewhere is entirely possible. But is “deadbeat” some sort of industry code? Nonsensical.
This makes you one of those “someones” “somewhere in the enormous credit card industry,” right? All kidding aside, I will defer to your expertise. Thanks for your answer.
Perhaps the specific wording is overreported. But I’ve seen interviews with industry professionals who explain the same concept, and read books by people who have studied the industry and explain the business model in the same way. For example, it’s often trotted out in dicussions of the 1% minimum payment and the industry’s general reluctance to bump the minimum payment up. You’re saying it’s not a code. I’ll buy that. And though I have some follow up questions, I don’t think they’re on point for this thread. Maybe you should start an “Ask the credit card industry insider” thread?
I’ve said it before and I’ll say it again - over the years both Mastercard and Amex have periodically increased my credit limits. I assume from that that I must have a reasonable credit rating (I did get the free credit reports once but have never seen the need to find out my actual credit rating). I always pay off my credit card balances every month - if I have to I’ll dig into my savings to do that (and then replenish my savings asap).
If someone in the credit card industry thinks I’m a “deadbeat” I really couldn’t care less. They clearly like me enough to keep trying to get me to spend more money.
Lord yes, it is. I can’t say the subject comes up often on polite conversation.
Fair enough. There is also kind of a continuum of issuers out there. Some are far, far more sleazy than others. I have very little experience working with the sleaziest issuers, and it is possible they do things somewhat differently.
Your point about this sort of thing appearing in books is well taken. But consider the overall quality of books about financial topics in general. I have read few books on investment that I have not wanted to burn. Books on personal finance are sometimes a bit better, but they usually amount to “keep a budget” and “don’t spend more than you have”.
The minimum payment issue is extremely complicated and somewhat outside my little area of specialization. That said, raising the minimum limit would wreak havoc on everything from risk modeling, short term financials, and our securitization of the managed receivable. Basically, credit card companies securitize their receivables just like mortgage lenders. They use the proceeds from these sales partly to fund their current receivables. I can only speculate what would happen to these securitizations if the time horizon for possible repayment were shortened. The results would probably be unpredictable, and our stockholders hate unpredictability.
The industry does not oppose raising minimum payments because it hates the little guy. It just does not like burdensome regulations, especially when they can have potentially dreadful impacts on the business.
I might start a thread, though I am always a little cautious about saying too much. I suppose I can just be clear about what questions I cannot answer. And for what it’s worth, I always pay my balance in full every month. I wonder if my employer hates me!
All kidding aside, I will defer to your expertise. Thanks for your answer.