"Rate tarts skew the market"

realaledrinker

Press release dated 4th April 2005:

"UK credit card issuers are spending millions promoting loss-leading introductory offers to a minority of rate chasers whilst the vast majority of customers are left holding uncompetitive accounts.

Research by The Co-operative Bank issued today (4 April 2005), shows that just 11 per cent of consumers are considering taking out a 0 per cent card in the next six months whilst six out 10 cardholders have never been tempted by an opening offer.

This is despite the fact that credit card issuers, with 0 per cent offers, spent £53m* on advertising their cards in 2004.

According to The Co-operative Bank the typical rate chaser is a male, homeowner, aged between 30 and 40 and has no dependents.

The Co-operative Bank's poll also shows that credit card customers are not fooled by low introductory rates. 77 per cent said no annual fee and 64 per cent stated a competitive standard rate were the most important aspects they took into consideration when choosing a new card. "

So why are the Co-op still offering 0% cards over 6/7 months? Beats me.

My take on that 'research' are that most credit card holders are indeed "fools"!

Martinslovechild

realaledrinker wrote:

According to The Co-operative Bank the typical rate chaser is a male, homeowner, aged between 30 and 40 and has no dependents.

I'm keeping a low profile from now on

deemy2004

Its herd instinct because other card companies do 0% so does the Co-op for if they did not and they lost customers than someone would be for the chop !

As stoozing becomes harder, I think it will become a more and more specialised sport with much less stoozing as people one by one are caught out by changes in the T&C's, but stoozing there will always be

SamC_4

My take is that the banks just need to make the introductory offers much more enticing, with longer interest-free periods and larger credit limits.

nearlyrich

Martinslovechild wrote:

I'm keeping a low profile from now on

Think so too, I don't fit any of the criteria so I had better stop right now:D

Tr@cker

They're on to the stoozers. The only cards i can now get come with a 35 quid BT charge. Still much cheaper than leaving 2.5k on the existing card and paying full-whack interest though now the intro offer has exauted.

Debt_Free_Chick

Tr&#64 wrote: »

They're on to the stoozers. The only cards i can now get come with a 35 quid BT charge. Still much cheaper than leaving 2.5k on the existing card and paying full-whack interest though now the intro offer has exauted.

How do the lenders know that the cardholder is stoozing? All they know is that the cash is BT'd to their current account ... .for what purpose, the lender doesn't know.

nh

"Not fooled" by low introductory rates? How condescending.

If people think paying 16.9% APR is better than switching cards every six months to continue to get 0% who is the fool?!

Reaper

I agree with Debt Free Chick. I don't believe the lenders care much about stoozers because there are so few of us. However what there are lots of is card tarts who move their genuine credit card debts around to take advantage of the 0% deals. These are the people being targeted by BT fees, there are more precise measures which could have been used if only stoozers were the problem.

nearlyrich

I have been turned down for a couple of cards recently which was a surprise, there is nothing on my credit reports to indicate I am not capable of paying back whatever they offer. I have a deal at 0% till Jan next year and I was hoping to build up a bigger stooze pot on a 0% for purchases card. I can't help thinking they know they won't get any interest out of my account:rolleyes:

Walletwatch

Reaper wrote:

I agree with Debt Free Chick. I don't believe the lenders care much about stoozers because there are so few of us. However what there are lots of is card tarts who move their genuine credit card debts around to take advantage of the 0% deals. These are the people being targeted by BT fees, there are more precise measures which could have been used if only stoozers were the problem.

I disagree. Earlier, with a cap on the BT fee, BTs were still profitable if you had a decent limit. With the cap on BT fees being removed, a 2% fee for a six month free offer, effectively becomes lucrative, only if the money is deposited at 4% net credit interest rate. Even if one were to stooze via their non-working spouse or other family members' accounts, a simple increase in this fee to 2.5% flat would ensure that the stoozing exercise is no longer lucrative in that fashion either. This makes 0% deals progressively less lucrative for the stoozer.

The rate tart on the other hand, stands to gain, even at a 2-2.5% uncapped charge for BTs. This is because he's carrying forward or transferring genuine debt balances, which, if left on the earlier card, would incur interest at anything between 9.9% to 24.9% or even higher. The rate tart would thus, stand to gain even at higher uncapped charge levels.