Use your credit card at the pub, or the dentist?

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If you answered pub, credit card data analysis shows you are more likely to miss your credit card payments and possibly might have your interest rate increased. Last week, a New York times story What Does Your Credit-Card Company Know About You? showed how credit card companies are using psychology and behavior analytics to create profiles of customers to monitor risk of missing payments and arming their customer service staff with this data and psychology training to ensure their balances are paid first. As more of us increasingly use credit cards we are arming credit card companies with data on our habbits, our likes, dislikes, enabling them to understand our behaviour, at times, better than we do.

Credit card companies have built sophisticated systems to mine data like - are cardholders using cards at therapy sessions, what time are they logging in to check your statement, how do they sound on the calls to the customer service reps, what brand motor oil they buy, etc and building a psychological profile. This is a fairly recent practice, and with the current credit crunch credit card companies are relying more and more on math wizards and these psychological profiles to manage default risks. While other worse case models that the credit card companies built, have failed these new profile based models have performed well even in this economic tsunami.

With psychological studies showing that cardholders are most likely to pay the bills of those companies with which they have an emotional connection, credit card companies are providing psychology classes and transforming their customer service reps into telephone psychiatrists, teaching them how to acknowledge and empathise with the cardholders, and discussing hypothetical cases.

So next time you use your card at the pub think twice, and don't be surprised to get a shoulder to cry on when you miss a payment and call the credit card company.

UK Q1 2009 credit card lending drops 8.7%

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According to data released by APACs today, the first quarter 2009 credit card lending dropped by 8.7% to £30.3 billion, when compared with Q1, 2008. Repayments dropped at a slightly lower rate, 7.9% to £29.6 billion. While credit card spending has dropped the use of plastic continues to increase as UK consumers made .9 billion plastic card purchases totaling £94.2 billion compared to 1.8 billion purchases totaling £91.2 billion in the first quarter of 2008. The number of purchases was 4.0% higher than in 2008 Q1, and spending was 1.7% higher.

This rise in use of plastic has adversely impacted the use of cheques. Its usage fell by 10.6% and the total value of cheques dropped by 9.4%, compared with the same three months a year earlier. The use of plastic is expected to continue its increase as more purchases are made online, more plastic products become available (like debit cards, prepaid cards, etc.)


Source: APAC's

While credit card interest rates rise, fewer consumers have credit card debt

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From Q1 2008 to end of 2008, the average credit card interest rate increased from 10% to an all time high of 15.7% by end of the year, a 57% increase. During this time the BOE has cut rates from 5% to 0.5%. Despite the interest rate increase, British consumers are less likely to have credit card debt than they were before the credit crunch started. In Q1 2008, 63% of consumers had revolving balances vs. 50% by end of 2008, this according to research published by Auriemma Consulting Group. That is a 21% drop in likelihood of having credit card debt.

The data shows that in Q1 2008 the average consumer credit card debt was £1,651. This dropped by 12% to £1,453 by end of 2008. However, with consumers having household income below £30,000, credit card debt increased by 23% over the same time from £1,111 to £1,366. This goes to show consumers that can afford to lower their debt levels did just that, however lower income households suffered. They were particularly hit by the over 50% increase in interest rates.

Does UK needs to look at capping credit card interest rates like the recent legislation in US by their house of representatives? Or should the consumers take more responsibility for their financial situation and live within their means. Maybe we need a little bit of both. Please comment and let us know what you think?

Abbey's Zero Credit card to become the new Travel Hero?

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Abbey relaunched its popular Zero credit card in time for the summer travel season. This credit card charges no fees for foreign exchange transactions (usually 2.75%) and cash advances, when other card companies are increasing them. So if you are planning on traveling overseas this summer this card could be a great option for you. The card also offers 0% on balance transfers for 12 months (3% balance transfer fee) and 0% on purchases for 3 months so could have a wider appeal.

Calculate your savings with this card using our compare page. If you will be traveling overseas add 2.75% X Anticipated overseas spending to get your potential savings. See table below:

Overseas Spend	Additional Savings
£500	£13.75
£1,000	£27.50
£1,500	£41.25
£2,000	£55.00
£2,500	£68.75
£3,000	£82.50
£3,500	£96.25
£4,000	£110.00
£4,500	£123.75
£5,000	£137.50

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Launching our site!

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Welcome to our site and our blog. We are launching our site to help you choose the best credit card. There are several sites that provide credit card comparison tables so you may ask why are we launching another site. We found most of the sites provide very basic information. While they provide you with information on rates , durations, specials etc they don't help you figure out how much money you can potentially save by switching to the new credit card. We aim to do that and provide a "true" apples to apples comparision.

Most best buy tables on the popular comparison sites are a good starting point but you still need to spend hours pouring through the credit card sites, reading about their fees, how they apply payments, when they start charging interest, and all the fine print. The calculator we have built,on the compare credit cards page, takes all that into account along with your spending habit, current balance, current interest rate and calculates your potential savings. You can then use this one number- the one that really matters (savings) with which you can make an apples to apples comparision and decide which credit card to get.

With rewards cards our calculator also calculates the value of the rewards you will get with airlines or shopping clubs etc., so you can see how 1.5Miles/£1 spend from BMI Amex card compare with 1 Clubcard point/£4 spend on the Tesco card. At the moment we have about the top 15 credit cards I researched. We will be adding more credit cards as we analyze them. If you would like us to analyze any card in particular just drop us a comment and We'll try to include it in the next update.

Our hope is we save you hours, maybe days of time you might spend trying to find the right credit card and save hundreds of pounds. The application process will be through the actual credit card issuer, and you may find more facts along with terms and conditions but hopefully no big surprises. Also please be aware of the typical APR. This is usually variable and only 2/3rd of applicants typically get this rate. Your rate maybe higher or lower based on your credit profile.

We plan on adding several new features, guides, etc., and welcome any suggestions. So please let us know any features, information you would like to see and we will try our best to include.