April 25, 2005
Have you ever wandered where all that money that you get fleeced in credit card charges goes? Well if going by recent reports a lot of it is being flushed down the pan with the credit card companies need to chase new custom to fleece some more.

The Co-Operative Bank carried out a survey that found that credit card issuers were spending in the region of £53 million a year in advertising their special deals, in the search for more custom, a good part of this was used on loss making introductory offers, that were only appetising to a minority of the custom that they were trying to attract.

........deals will be unsustainable in the future and low rates and transparent deals that are competitive will be the next and better route to go down........

These customers that considered taking up the offer of a zero percent credit card, only amounted to 11%, this is in line with 60% of existing credit card holder’s who didn’t give the idea a second thought, this was not the plan I guess, that the credit card companies had in mind.

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Add this total of £53 million to the £30 million that was spent on media advertising, print and billboard’s, it is a pretty penny. Don’t you get the feeling if credit card charges and APR’s were lower, then that would make people more inclined to take out a credit card, than any special deal could give you for 6 months. Worth a thought I think.

All that these deals are doing is playing up to all the “rate tarts” that are out there, giving them more choice and variety, that lets them move their debt from card to card to get themselves interest free debt and better deals. If you have not heard of the “rate tart” then in their survey the Co-Operative Bank found that the average “rate tart” fell into the bracket of a male aged 30-40 that was a home-owner, with no dependants.

The Co-Op banks chief operating officer Sheila Macdonald also noted that all of these deals will be unsustainable in the future and low rates and transparent deals that are competitive will be the next and better route to go down.

This survey also found that most people were wary of the 0% deals and 77% considered that no annual fee was a factor for choosing a credit card and 64% claimed that a lower standard APR was important to them and would choose a credit card on this basis.

Barclaycard though said that it was not very advantageous for them to use T.V advertising to promote they’re and found that direct mailing to potential customers was a better way of showing the 0% deals that they had to offer.

Though as if to go against the grain, the Halifax said that they saw a rise in credit card sales of 1.2 million cards in the last year, due to they’re T.V advertising campaign.