Re:Credit cards have a privacy problem
by astura on Tuesday August 27, 2019 @08:45AM
(#20808951)
I dont understand the confusion, its called a 'loss leader."
These companies have very, very smart people working for them, analyzing all the data they have to come up with a product and its limits. They know x% will not be profitable, and they include that in the profit calculations.
Why dont they simply cut off the non-profitable customers? Because people don't like this and they'll quickly tell their friends "Don't sign up for Discover, they cancel your account if you don't make them money." It wound be all over Slickdeals and blogs. No credit card is going to survive cancelling accounts for using their credit line in totally normal ways.
Just like a store could say "for every 10 sale priced items you buy you must buy a full priced item" - but then nobody would shop there.
These companies have very, very smart people working for them, analyzing all the data they have to come up with a product and its limits. They know x% will not be profitable, and they include that in the profit calculations.
Why dont they simply cut off the non-profitable customers? Because people don't like this and they'll quickly tell their friends "Don't sign up for Discover, they cancel your account if you don't make them money." It wound be all over Slickdeals and blogs. No credit card is going to survive cancelling accounts for using their credit line in totally normal ways.
Just like a store could say "for every 10 sale priced items you buy you must buy a full priced item" - but then nobody would shop there.