Card sharps
Megan McArdle gets some easy plastic and fronts several theories:
1) The credit card market is contracting unevenly.
This seems plausible enough: scarcely any markets change en masse at precisely the same speed. To support this premise: a bank that is apparently doing well these days bounced me $14k additional credit this fall, while a bank that otherwise specializes in less-than-prime customers, from whom I have an affinity card, dinged me for two percentage points on my APR more or less simultaneously.
2) The credit card market isn’t contracting. So far their models are actually working, and their business model remains more reliable than other industries.
I have my doubts about this. Several card issuers have actively sought to unload certain of their customers, or at least sell them off to someone else.
3) The credit card market needs to take on new customers because people are frantically paying down their high-interest credit cards.
I might buy into this. The aforementioned bank that’s doing well made a serious, almost desperate, pitch for balance transfers from my higher-balance cards, figuring that I’d jump at the chance to get rid of a couple thousand bucks or so at a double-digit APR. Which I would.
4) The credit card market needs to take on new customers because they’re on the verge of going bust.
Certainly their revenues from merchant fees will suffer if the merchants aren’t selling anything.
5) Alex Tabarrok is right and the credit crunch is underwhelming.
I’m not one to bet against Alex Tabarrok, generally, but I’m seeing plenty of whelm to go around.
McGehee »
12 November 2008 · 1:32 pm
I forget where I said it, but somebody had opined that maybe soon he would stop getting new credit-card solicitations. I replied that if he pays his bills he would always get these solicitations — and probably more of them, since he’s a more attractive customer for that very reason, especially when the issuers need more, and more reliable, revenue.