When Prudential started up the EGG credit card operation it suffered huge losses to buy its way into the business.
Having established a reasonable customer base, they put up their charges and made a profit.
Then they sold it to Citibank who have decided to reduce the number of customers they serve. These include 'unprofitable' customers who pay off their bills in full each month. In some instances these customers have been deemed a 'poor credit risk'.
To the casual onlooker this does seem odd, especially as the bank still makes a turn on the commission retailers pay on their turnover.
Nevertheless one wonders how long it will be before other credit card companies expunge from their customer base prudent cardholders who pay off their debts each month in favour of those customers who maintain, high balances, pay high interest charges and could be potential bad debts.
As one sub prime door closes another one opens?
Thursday, 28 February 2008
Why is Visa up for Sale?
On 25th. of February, the BBC reported that Visa, the world's biggest credit card network was planning to raise a record amount of money by issuing shares and listing on the New York Stock Exchange.
'Visa hopes to raise more than $18bn (£9bn) from the listing, which would make it the largest Initial Public Offering (IPO) in the US to date. '
From this amount, $10.2 billion would be paid to the banks who own the network, and $3 billion would be set aside to cover the cost of current ongoing litigation. Charges include allegations of price fixing by major retailers, and anti competitive activities towards other card operators.
There is one question that begs the asking however. If you are the world's largest credit card company, and you have made huge profits over so many years, why would you want to sell of part of the business.
Do they think that consumers will spend less on their credit cards; that bad debts might increase, or are the banks that own Visa so strapped for cash that they have to start carving up the golden egg laying goose?
'Visa hopes to raise more than $18bn (£9bn) from the listing, which would make it the largest Initial Public Offering (IPO) in the US to date. '
From this amount, $10.2 billion would be paid to the banks who own the network, and $3 billion would be set aside to cover the cost of current ongoing litigation. Charges include allegations of price fixing by major retailers, and anti competitive activities towards other card operators.
There is one question that begs the asking however. If you are the world's largest credit card company, and you have made huge profits over so many years, why would you want to sell of part of the business.
Do they think that consumers will spend less on their credit cards; that bad debts might increase, or are the banks that own Visa so strapped for cash that they have to start carving up the golden egg laying goose?
Monday, 18 February 2008
Whatever you want to know
Whatever you want to know.
Questions, answers, opinions; some serious some not so.
Whatever you ask we cannot guarantee to know the answers to all your questions, but some smartarse probably does or thinks he does. In any case there will be someone out there with an opinion.
Questions, answers, opinions; some serious some not so.
Whatever you ask we cannot guarantee to know the answers to all your questions, but some smartarse probably does or thinks he does. In any case there will be someone out there with an opinion.
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