Although traditional thought and general intuition may lead you to believe that credit card companies thrive off of people whom generally hold balances on their credit card each month so that they can pull in profits by charging their (sometimes) exuberant APR’s. However, a recent New York Time article suggests many credit card companies may be shifting their philosophy towards lending to individuals with prime credit scores, rather than targeting those regularly paying minimum balances.
After all, if you pay off your credit card balance in full each and every month (and assuming your credit card doesn’t impose any annual fees) then essentially your credit card company makes no profit off of your account. Ideal for you, but not the credit card issuer.
So in the past these accounts have been less desirable than someone who, for example, routinely holds a 50% balance on their credit limit but still makes regular payments.
Last week BankVibe posed the question, “are credit card companies willing to negotiate?” And in this article we highlighted the fact in which The Washington Post reported on – that in the month of June of 2009, the charge of rate for all currently issued credit cards was roughly 10.24%.
What is a “charge of rate?” The charge-off rate is the amount of charge-offs divided by the average outstanding credit card balances owed to the issuer. Charge-off is actually an accounting term that means a company has decided it has no chance to collect a debt and charges it off its books.
Therefor targeting these once profitable segment of individuals whom consistently outspend their income and in turn suffer routine interest rate charges on their credit card debt are (in a nut shell) in over their heads to the point where most credit card companies are deciding to cut their losses and go after a more fiscally conservative market of consumers.
So if you are in the market for a new credit card and still happen to have a decent credit score, you may be able to find these premium offers as these credit card companies would rather do business with you than there once more profitable target market.