What's the bank's ideal customer?

sillystudent_2

I've been wondering this for a while - which does a bank prefer - the customer who is always in credit and has never missed a payment/direct debit, or the customer who is constantly overdrawn and racks up hefty interest (but still has a very good credit history/stays within overdraft limits)?

I always used to think it was the former, but then banks make their money through lending - so surely their perfect customer is a person with a good income, almost perfect credit history (i.e. minimal risk of default) but nonetheless lives in their overdraft and carries quite a lot of debt?

Obviously both types of customer are essential to the running of a bank, but which extreme of customer do you reckon banks generally prefer? In other words, what type of person is a bank's favourite customer?

Look forward to the responses

thriftymomma

The ones that make them money and don't cause them any fuss I should imagine.

nearlyrich

Probably not me, they don't make any money from me except merchant fees on my credit card transactions.

nickmack

sillystudent wrote: »

I've been wondering this for a while - which does a bank prefer - the customer who is always in credit and has never missed a payment/direct debit, or the customer who is constantly overdrawn and racks up hefty interest (but still has a very good credit history/stays within overdraft limits)?

I always used to think it was the former, but then banks make their money through lending - so surely their perfect customer is a person with a good income, almost perfect credit history (i.e. minimal risk of default) but nonetheless lives in their overdraft and carries quite a lot of debt?

Obviously both types of customer are essential to the running of a bank, but which extreme of customer do you reckon banks generally prefer? In other words, what type of person is a bank's favourite customer?

On a basic level, a customer who makes them as much money as possible with the lowest risk of default.

On a finer scale, they want you to use options such as Internet Banking and Paper Free statements, as it costs them less to administer your account.

Loyal customers who take out loans, credit cards and mortgages help rack up extra profit. They want you to stay with them for the long term and sign up your wife and kids as well.

If you regularly use your overdraft, leave a decent balance on your credit card but make the minimum repayment each month and go with the banks morgage and loans, you should be making them more than the average punter.

Some evidence of this can be seen with credit cards. There are quite a few posts on here with applicants with excellent credit histories, being turned down for a new card or having their account closed, because it's envisaged the provider won't make enough money from them.

johncolescarr

The banks ideal customer is the chap I work with. Loyal to the same bank for life, saves with them at near zero interest rates and also has a credit card and loan at stupid percent, who uses the credit card to get money from ATMs. Will only get advice from the branch manager who sells them all of their crap products, like the £25 a month "premium" account and poor financial packages.

I cast my ideas in a recent poll on advice to the government that there should be independent advisors available in every branch (or at least every major branch) paid for by the banks themselves so that they would have to compete for custom rather than just rely on loyalty and mis-leading information from the bank managers who will obviously only recommend their own products

willo65

johncolescarr wrote: »

The banks ideal customer is the chap I work with. Loyal to the same bank for life, saves with them at near zero interest rates and also has a credit card and loan at stupid percent, who uses the credit card to get money from ATMs. Will only get advice from the branch manager who sells them all of their crap products, like the £25 a month "premium" account and poor financial packages.

I cast my ideas in a recent poll on advice to the government that there should be independent advisors available in every branch (or at least every major branch) paid for by the banks themselves so that they would have to compete for custom rather than just rely on loyalty and mis-leading information from the bank managers who will obviously only recommend their own products

They do compete for custom their is always some ad campaign running and offeres on products to compete but if people can't be bothered to shop around then thats their problem.

I don't see any major stores with personal shoppers advising whats cheaper elsewhere.

Rupert_Bear

Being an ex bank employee the preferred customer was the one who regularly used their overdraft.

melorablack

It makes me laugh when I see people saying "I am a good customer and have been for however many years, I always have so many thousand in my savings accounts and bank accounts and repay my credit card in full"

As far as the banks are concerned that is not a good customer, jusdt a hassle free one.

The really good customers are the ones they earn interest from without having to chase up payments etc.

How else would they make money? People with savings cost them money in interest they have to pay out.

bluffer

thriftymomma wrote: »

The ones that make them money and don't cause them any fuss I should imagine.

nailed it, i reckon.

opinions4u

How else would they make money? People with savings cost them money in interest they have to pay out.

But without that savings money they would have less (or no) money to lend out.

Don't kid yourself. Low rate savings accounts are immensely profitable.

johncolescarr

willo65 wrote: »

They do compete for custom their is always some ad campaign running and offeres on products to compete but if people can't be bothered to shop around then thats their problem.

I don't see any major stores with personal shoppers advising whats cheaper elsewhere.

You have a point and I do agree with you somewhat, however what I didn't like was that the bank in question (okay its Lloyds) were allowing one of their customers to use their credit card as a cash card and incurring huge charges, whilst harbouring large sums of money in their current account.
You may argue that the customer should know better, but there are a lot of intelligent people who are completely baffled by financial products and services. I think the bank at least has a duty to let their customers know how best to use at least their own products.