What do our Purchases Tell Credit Card Providers?
Posted June 21st, 2009 and last modified November 23rd, 2011It’s no secret that credit card issuers monitor purchases of consumers in order to better understand their psychology – but what for?.
Consumer profiling is key when it comes to marketing credit cards and tapping into what tempts us to spend and use our cards more than we need to. Even for those who are reserved with their credit card use have credit card categories targeted for them.
What do certain purchases indicate to providers?
An article in the New York Times suggested what sort of purchases suggested about consumer discipline in repayments. For instance;
Consumers who made consistent repayments on their credit card balances:
- Premium products – From car oil to bird-feed, consumers who had a preference for premium brands of products did not miss payments as often as their ‘no-frills’ counterparts.
- Furniture pads – Yes, furniture pads. People concerned about the wellbeing of their furniture making noises or rubbing against the floor tended to be more consistent in their repayments.
- Carbon-Monoxide Detectors – Not sure what it is? In short, an electronic device plugged into a power point which alarms the area if CM concentrates are too high in the area. Consumers who purchased at least one were found to be more secure and responsible in their credit usage.
Consumers who made inconsistent repayments on their credit card balances:
- Car Accessories – From exhausts, body kits to spoilers, those inclined to spend money upgrading their car unfortunately were more inclined to miss credit card repayments then those who didn’t.
- Bars, Pubs and Clubs – While there’s little evidence that people who spend at these establishments are less reliable in debt repayment in general, it was suggested that those who funded drink purchases via credit were more likely to have late repayments.
- Gambling – Whether it’s cash advances from a casino ATM or depositing funds into an online betting wallet, credit card owners who frequently engage in either would also frequently engage in not repaying.
Are these purchases damaging to my credit score?
Credit card providers are impartial when it comes to your purchases, as long as you replay. It doesn’t make a difference if you miss a $200 payment whether it’s a charity donation or gambling. $200 of credit card debt is still $200 of credit card debt.
What can banks they do with my information?
Purchase monitoring is never used to single out consumers (unless the purchase is illegal or perceived fraudulent), but simply to better understand consumer psychology and market new credit cards to appeal to target markets.
Two of the most popular forms of credit cards in Australia are no-frills low interest rate cards and enticing reward program cards. Depending on how you use your credit card, you may be more suited in one category than the other.
See the range of Australian reward program credit cards here, or read more about reward cards to determine if they’re the best choice for you.
See the range of Australian low interest credit cards here, or read more about low interest cards to determine if they’re the best choice for you.
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