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OT - Bank of America Credit

You can be confident that BoA has done its due diligence and believes there are profits to be had in this venture. BoA's good/best customers won't be affected because they can and will go elsewhere if rates and fees rise - which of course they won't for those premier customers.

Several CC companies like GE Capital have made a fortune by bottom feeding for high risk coustomers and then managing/offsetting that risk through usury rates and computer systems that chase deadbeats to the ends of the earth. BoA feels it can do this or it wouldn't have started this program.

Also, a pilot program allows a company to further mitigate risk and learn as it goes. Qualifications to get a card can be quickly changed going forward as payment data are collected, and credit limits can be reduced for those cards which are believed to carry too much risk.

If the government doesn't step in to halt this practice, competition will force all CC companies to follow suit. Such is capitalism with all its warts.

Reply to
lanman
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Defaults are viewed as just another cost of doing business in the credit card industry. That risk is managed and built into the lending institution's rates and fees structure. People who get this card will be in a separate category and will no doubt pay much higher rates and fees because they are undocumented and here illegally.

Reply to
lanman

In fact they make from 1 - 5% from the sellers of the products and services you purchase depending on the sellers size and bargaining power.

Reply to
lanman

After slogging down one of the longer threads (OT, no less) in this NG, I sort of lost track of Who's on first, What's on second and so on.

HOWEVER,and with much trepidation lest this starts another cascade -

1) whoever (Steve Scott?) said - in effect - that what can't be retrieved from the deadbeats should come from the CC companies' profits and not from the rest of CC holders, seems to miss the point that the CC companies' profits come from the rest of CC holders: US!

2) whoever commented negatively on BoA for issuing CCs to non-citizens/non-residents/undocumented folks/illegal aliens, might ponder the difference between use of CCs in the USA issued by BoA in the USA to these people VS. use of CCs in the USA issued by BoA to those same people in their home countries before they somehow made it over the border and stayed.

INCOMING!!

Jay .

Reply to
Jay M Apple

Jay:

You're a better man than I. My eyes glazed over A LONG TIME AGO ;-)

Bob

Reply to
Bob Wang

Very plain except it doesn't make any sense. It is already coming out of profits. The product is priced with the target demographics in mind.

Reply to
David Smith

Static thinking. Business is dynamic.

If the profit dimishes, the owners or investors will make the necessary changes in policy to regain the optimum position. In the case where there are too many defaults, the company may try to raise the interest rate on the remaining customers. When the customers move their business to a more rate-friendly competitor, the company will take other steps.

If the company is large enough, one of those steps will be to influence legislation.

Reply to
HeyBub

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