CREDIT CARD PSYCHOLOGY 101

The NY Times has an excellent article on credit card companies and how they have changed over the past 25 years. Here's a snippet.

Just a little more than two decades ago, the credit-card business was a quiet, slightly boring industry dominated by banks looking for easy revenue. Card issuers made money by collecting annual dues and interest payments from cardholders as well as fees from merchants each time a customer used a card. Then the math whizzes arrived. They emphasized that the biggest profits didn’t come from people who always paid off their bills but rather from less-responsible clients who never paid their entire balance, and thus could be milked through silently skyrocketing interest rates, late fees and other penalties. Since 1995, the percentage of the industry’s income from cardholder fees has more than doubled to 40 percent.

The article is really a nice window into the psychology behind the industry, and how they use your purchasing history to determine credit limits and interest rate hikes. There's also some good information for those looking to negotiate with the credit card companies.

- Mark