Harsh Reality: The Responsible Credit Card User is Not a “Good” Customer

by Miranda Marquit

During the Financial Blogger Conference a couple weeks ago, one of the sessions featured companies with affiliate programs. (If you are trying to use your web site as a side hustle, affiliate programs can make you some money.) One of the credit card affiliate program directors said something that really stuck with me: “We’re looking for people who carry balances.”

It was probably one of the most honest things I’ve ever heard from someone shilling credit cards. Because the truth is that the best customers for credit companies are not those that pay off their balances each month. Indeed, if you are the responsible type who pays your balance off each month, the credit card issuer is missing out on the interest you would be paying.

Who is the Ideal Credit Card User?

The ideal credit card user is, of course, someone who carries a balance. The ideal credit card user pays interest straight into someone else’s pocket. However, the ideal credit card user isn’t someone who is drowning in so much debt that he or she can’t make payments. No, the ideal credit card user needs to be able to make payments on time, and he or she needs to be able to pay enough of the balance down that he or she still has room to charge more, but not pay the balance down so much that the issuer begins to lose interest revenue.

It’s a fine line, but the best credit card user — at least from the standpoint of the issuer — is someone is in enough debt that he or she can’t pay it off easily, but not in so much debt that he or she is drowning. To be an ideal credit card customer, you need to be able to keep charging, and keep making payments without breaking the bank, but be unable to get ahead and get out of debt.

The ideal credit card user will continue to pay interest to the company for years and years.

You Don’t Want to Be an Ideal Credit Card User

It’s fairly evident that you don’t want to be the ideal customer for a credit card company. You do want to use your credit card, but it should be as part of your financial plan. Use it for specific items, and pay the balance off each month. Credit card issuers still make money — merchants pay a transaction fee every time you swipe — albeit less than they would make if you were carrying balances.

You need to figure out your spending priorities and make better spending decisions. Place a moratorium on using your credit cards until the situation is truly under control. Work on a plan to pay off your credit card debt, and stay out of debt. As long as you are the ideal credit card user, you will be paying money straight into someone else’s bank account, for nothing more than privilege of borrowing money. If you can break that cycle, you will keep more of your money, putting it to work for you, rather than just lining someone else’s pockets.

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{ 3 comments… read them below or add one }

Mekhong Kurt December 19, 2011 at 7:08 pm

Though traditional American Express cards are really not credit cards, instead falling in between actual credit cards (such as Visa or Mastercard) and debit cards, a friend of mine found out that even with AE cards, it also holds true that the company prefers that in-between customer discussed in this article.

He had his card for around 30 years but not *once* had carried *any* balance forward, instead paying in full when he got his bill. Then he was told out of the blue that in order to keep his card, he would henceforth be charged a substantially higher fee. Naturally, with a three-decades sterling credit record (not just with AE, either), he asked why — and was told the company wasn’t making enough money off him because he never had to pay any interest.

Card companies are as bad as retail banks these days.


Sherrie L July 19, 2012 at 10:29 am

I have never understood the principle of having a card that charges you an annual fee for the privilege of incurring debt. So, American Express would be firmly kicked to the corner, regardless of how long I had been a customer, if this happened to me. BTW, I have a corporate AMEX card with no fees.


nan April 2, 2012 at 12:19 pm

“Deadbeat” is the credit card industry term for a customer who doesn’t borrow beyond the free grace period, paying on time and thus paying no interest. More from the perspective of the issuing bank rather than the card association – they get a bigger chunk of each transaction fee.


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