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Nationwide 0% BT Credit Card - Only 1 per lifetime
Comments
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It's not one BT in your life ... it's one free BT in your life.
Why should they give someone endless access to money at 0%? They have to pay for the money, so a good business model would be to charge for it.
Because every other lender gives people excisting customer offers at 0%.
So once someone has used nationwide once they will never use them again, bad business model as you will lose customers and not get them back.0 -
Because every other lender gives people excisting customer offers at 0%.
So once someone has used nationwide once they will never use them again, bad business model as you will lose customers and not get them back.
You will lose unprofitable customers who are costing you money. How is that a poor business model?
Business isn't just about gaining market share, it's about getting profitable customers, even for a mutual.0 -
Because every other lender gives people excisting customer offers at 0%.
So once someone has used nationwide once they will never use them again, bad business model as you will lose customers and not get them back.
Exactly. And it's not free in any case. They get the handling fee and for every squeaky clean surfer who incurs no charges and pays no interest there will be someone who misses a payment or keeps a balance after the 0% period ends so Nationwide will make a lot of interest and fees across these accounts, even combined with old customers coming back.
As it stands, it appears that they don't offer new 0% rates to existing customers and then they refuse all future 0% rates for previous customers. This combination is not good business. If it was, why would all other CC companies offer new rates to existing customers? Perhaps they're all wrong and Nationwide are right.0 -
You will lose unprofitable customers who are costing you money. How is that a poor business model?
Business isn't just about gaining market share, it's about getting profitable customers, even for a mutual.
How do you not make a profit when you charge 3.1% and you can borrow money at 0.5%? Of course they still make a profit on accounts where people pay no interest. They just make more profit from some other customers0 -
How do you not make a profit when you charge 3.1% and you can borrow money at 0.5%? Of course they still make a profit on accounts where people pay no interest. They just make more profit from some other customers
Your posts show clearly that you have no understanding of how this works.
Where do they borrow money at 0.5% from? Even wholesale funding (which makes up a small percentage of Nationwide's funding) costs more than this. Retail funding (savings) costs, on average, significantly more.
Then you have the costs of administering a credit card on top of this. A one-off fee of 3.1% doesn't go far towards running a credit card for 12-18 months.Of course they still make a profit on accounts where people pay no interest.
Where there is a 0% offer and the customer is carrying a large balance, then they will probably make a loss.
This is probably an example of where the banks differ from the building societies. Banks, on the whole, want to build market share, even if it costs them a bit of money. At a building society, a credit card does not give membership rights - it's just there to generate profits for the society. So if there's a population who aren't making profits (i.e. serial 0% BT users), there's no point in keeping them as customers.0 -
Your posts show clearly that you have no understanding of how this works.
Love pompous statements like this on this forum. I'm sure people can make their own minds up about the level of understanding and clearly you think that 3.1% isn't profitable, and I disagree.Where there is a 0% offer and the customer is carrying a large balance, then they will probably make a loss
Why only probably? You seemed so sure. And how would a customer carry a large balance? Nationwide set a limit on the maximum balance when they issue the card and the customer has to pay back a minimum amount every month so this balance can only decrease over the term.
And surely a small balance would be less profitable? The tiny amount of fee paid up front wouldn't cover the cost of running the account.
But as you've said, I have no understanding of how this works. Best leave it to the experts0 -
I'm sure people can make their own minds up about the level of understanding and clearly you think that 3.1% isn't profitable, and I disagree.
Do you know what the average cost of funds is to a credit card provider then? Add to this the ongoing costs of maintaining an account, and I bet that over 18 months you'll get to a figure greater than 3.1%.Why only probably? You seemed so sure.
It's 'probably', because in most cases, they will make a loss on it. In a small number of cases, interest on cash advances or purchases, and/or income from retailers where a customer has continued to make purchases, will mean that the account makes a profit.
On aggregate, these accounts will be loss-making during their promotional period,And how would a customer carry a large balance? Nationwide set a limit on the maximum balance when they issue the card and the customer has to pay back a minimum amount every month so this balance can only decrease over the term.
They can still spend or perform cash advances to increase the balance.
Despite this, even if the card is no longer used, if they only make the minimum repayments, the balance will not decrease by much over the promo term.
I should point out that I have spent quite some time performing analysis on this for a major card issuer. None of what I've said above is guesswork.0 -
You will lose unprofitable customers who are costing you money. How is that a poor business model?
Business isn't just about gaining market share, it's about getting profitable customers, even for a mutual.
Why bother appealing to these customers in the first place then?
If they dont want serial BT users why not put in a condition you have to have the card 6 months and use it in that 6 months before you get the long BT.0 -
So they have a product that loses money for them aggregated across all accounts during the introductory period and they keep the product solely for customers that stay on longer than the introductory period, i.e. the point at which the card becomes worthless to the customer because they aren't offered a new 0% BT deal. You're absolutely right. I really don't understand it0
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Update on this. Called them to query the whole situation with the wording in the letter suggesting a lifetime ban etc and they said if you apply 12 months after you have closed an account with them, you will become elligible for introductory offers again. Obviously that's only one representative at Nationwide but she seemed pretty sure.
So the "unprofitable" customers are welcomed back after 12 months0
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