Tag Archives: credit card loyalty

It’s Grad Season and Lots of Businesses Want to Meet You

Your 17 to 21-year old has banks, car dealers and especially credit card companies salivating to meet them.

Those companies will do whatever it takes to get their business. Banks, and especially credit card companies, have THE best marketing minds in the country and want your teenager in debt to them – really soon and really deep.

We have a huge emotional attachment to our first credit card. It’s the reason they’ll do whatever it takes to be front and centre in your teenager’s wallet. Once they’re first, they own you and the memories and loyalties are way bigger than a teenager’s first boyfriend or girlfriend – and last a lot longer. On average, we keep our first credit card for over 15 years. It doesn’t matter the rate hasn’t been competitive for years, that the perks are junk or the fees they add on.

It’s not even important that they’re students and don’t have much of an income. For this group, the default rates are below average because, in most cases, parents will step in and pay the balance, or at least make the payments.

Why you? Because they can’t market much to your parents. Adults already have all the credit cards they need or want. So they can’t grow their business unless they get to you. It’s millions of fresh customers and bonus: You don’t know squat about credit and the dangers of credit cards, but you do love to impulse buy.

The same applies to banks wanting to get you hooked on an overdraft or line of credit once you have some income. That overdraft will be there for decades and it’s not like you know how to shop around for the best loan deal or rate.

Car dealers also can’t wait to meet you. How many cars are you going to buy in a lifetime? Three? Four? Five, maybe? Well, the average salesman sells maybe a hundred each year. So who do you think knows stuff and totally has the upper hand? It’s like bringing a plastic knife to a gun fight – you’re gonna lose, even if you bring one of your parents or a buddy.

So you’re all set. You’ve got your student loan payments for two decades, you got the credit card, an overdraft and that car payment. Grade five math says that most of your income is now going to pay all that. So someone telling you save some money is just a pipedream.

Lowering Your Credit Card Rate

I was surprised to get a number of media calls about a story the CBC did last week. They went to a Winnipeg mall, randomly picked 10 people, and asked them to call their credit card company to get a lower rate, which six out of ten did accomplish.

Can we lower our obscene credit card rates that the no-service mega banks charge us? In the words of Barrack Obama: Yes we can! Let’s face it, credit card rates run 19% plus when prime is around 5%? Give me a break. Besides, full rates are like sticker price on a car – and who pays sticker?

In 2006, North America wide, credit card companies mailed out over 6 billion junk mailers but their response rate is less than a third of one percent. It’s not only very hard to get new clients, it’s also very expensive. So good business practices say keep the customers you have loyal to you and that’s all this amounts to.

You don’t really need a script, you just need to know you can do it and call the toll free number on the back of your credit card. You should have one of the junk mail offers in front of you. Best if it’s one from Capital One or MBNA offering a fixed rate card at 9.9 or 10.9%. Don’t use one of the teaser rates they use to suck you in for 1.9% or so. That’s only temporary – you’re looking for a fixed rate that doesn’t end next week!

Simply tell customer service you have this offer and would like them to match it because you’re a loyal and good customer. The rate on the offer in the mail is way better and you’re considering switching to save money. If they don’t cooperate, ask to speak to a supervisor.

You’ll likely get it if you have a credit score over 720, have dealt there for a while and have a good payment track record. You’re exactly the kind of client they want to attract and keep!

You’ll likely strike out if you’re at your credit limit, have been in arrears and are only making minimum payments. Card issuers aren’t dumb. They know most of those customers are lucky to have a credit card, and switching is more of a threat than reality.

But remember: If you don’t carry a credit card balance each month – who cares what the rate is and THAT is the situation we should all be in. It’s the start of financial freedom!