Minimum Payment

CannyJock

td_007 wrote: »

Not sure if that will help. The equifax report that I got reports in addition to a box for minimum payment and promotional rate:
Credit Limit
Statement balance
Payment amount

Which means even if one pays £1 more than the min payment, the actual amount will be still be seen in the "payment amount" box and then it is easy to calculate the status versus the "statement balance" box.

All in all, with this information it now becomes possible to separate "stoozers", "strugglers" and "clearers" and the cc companies have one more tool to pick and choose their customers.

Yup, mine too, but didn't want to copy and paste the real figures

Remember that outside agencies looking at your credit report don't see who the credit is with. So they can't tell if the minimum should be 1% with Halifax or MBNA, or 3% with Nationwide or Tesco.

Agree on the profit profiling being easier to do, luckily (?) the biggest problem for stoozing at the moment isn't access to credit, but finding somewhere profitable to put the money

never-in-doubt

ElkyElky wrote: »

If you pay only the minimum payment towards a credit card statement, it will be reported to the credit reference agencies as being the minimum payment.

Does this have any negative impact on your credit file?

I have never paid only just the minimum payment but have noticed there is a column on the credit report stating whether its minimum or not.

Now then stranger - how was the jollies and the time away from MSE? :beer:

ElkyElky

never-in-doubt wrote: »

Now then stranger - how was the jollies and the time away from MSE? :beer:

!!!!!!. Just glad to be back home. Wont be going back to Portugal any time soon Talking of MSE... I did the naughties yesterday and applied for another credit card :j ditched the Capital One though, oh and I put their card down the bog.

moneysavingmarrow

I dont buy into this theory that stoozers are being looked upon in a negative way by cc companies.
They must be the most stable and low risk consumers of cc company products, being that they are playing the game and wish to carry on playing the game and are prepared to pay a fee up front (presumably in excess of what the card companies pay for their borrowings) to borrow money which the companies know they will then make the utmost effort to then pay back in the allocated time in order to start the cycle over again.

CannyJock

moneysavingmarrow wrote: »

I dont buy into this theory that stoozers are being looked upon in a negative way by cc companies.
They must be the most stable and low risk consumers of cc company products, being that they are playing the game and wish to carry on playing the game and are prepared to pay a fee up front (presumably in excess of what the card companies pay for their borrowings) to borrow money which the companies know they will then make the utmost effort to then pay back in the allocated time in order to start the cycle over again.

You would think

The reality is that stoozers are statistically insignificant to card companies, we're at the extreme end of their customer distribution curve (the low-risk, low-profit end).

A lender's view of risk is all about their client mix. They "need" a level of stability from those who pay their cards in full, don't miss payments to keep the funds flowing and drip-feed the merchant fees. These are also the people who make them money on PPI.

The revolving debt clients who make at least the minimum payments, pay them interest and keep up the payments on their PPI are the plum customers - pretty much safe and very profitable.

Then you've got the sporadic non-payers who incur fees, charges and interest. They're in some sort of difficulty and are candidates for making a cash withdrawal on their card. Potentially hugely profitable, but are now a risk for defaulting. In times gone by they would have increased their credit limit, tried to cream them for as much as possible but maybe hoping they are encouraged to BT the funds elsewhere before the pack of cards collapse.

Then you've got the stoozers who smile sincerely, shake the hands of the card companies and thank them for a generous credit limit, only to immediately BT the maximum to another account where it earns them money while repaying the minimums. The card companies can see exactly what you've done but can only shrug their shoulders, take the BT fee and hope you're a stoozer who will repay it at the end and not a defaulter. Meanwhile of course they're hoping you miss a payment or put a purchase on your card

The other side to remember is the variety of additional products that they'll try and sell you offer for your benefit. Every customer is a potential new customer and the easiest people to sell to are your existing customers.

anniecatz

CannyJock wrote: »

Interesting, care to elaborate on the sort of penalties?

How do you see the new reporting system being used by the card companies for assessing applications and credit limits?

They'd find a way of introducing new charges or interest rates, for example they had very long term customers who had had a card for years, but it wasn't cost effective so they sent a letter saying if they didn't respond saying they wanted to keep the card they would cancel the account or add a £30 charge a year to maintain the account. People who always paid in full every month. People who only pay the minimum are their favourites!

chattychappy

CannyJock wrote: »

In my opinion it's allowing them to streamline for profitability.

With you 100%.

Can you imagine this kind of co-operation between competitors in other industries? It would be akin to a cartel and fall foul of competition policy. I suppose whilst they can say it's to do with "responsible lending" it will be seen as for the greater good and will go unchallenged.

(Or perhaps it will be challenged in a few years and they'll be a right 'ole kerfuffle as people try and work out what claims they're entitled to make.)