At 2:21 PM -0400 10/23/02, Patrick Chkoreff wrote:
I guess I hadn't considered that angle. As you point out I'm sure that all the CC companies out there do operate on some "dynamic risk assessment model" that would be almost equally as applicable to the IG crowd. However! (read on)Beautiful! Can you say "secured credit card"? :-)
For excellent credit risks such as Mike McNamara and Patrick Chkoreff, we'd get a card with a 5 kilo limit and no security deposit.
=)
When a customer starts missing payments or paying late on a regular basis, you could send him an email asking that in addition to his regular payment, he also put up an extra security deposit to be held in escrow. That's the penalty for erratic payment! If you want the deposit back, just start paying regularly again!I still think it's assuming too much to believe that a IG based CC company could survive without fund recovery, whether by force or other means. The current CC model surely operates on basically the same "probabilities and incentives" premise. The incentive for on time payments with a traditional CC are lower interest rates, a good credit rating and a higher credit limit. In the probabilities department it's probably safe to assume that CC companies are using some predictive equation to dole out the different limits and interest rates to people.
It's all probabilities and incentives. No force involved, ever.
Of course we know the current system really doesn't work that well! People declare bankruptcy, have their assets frozen, etc. despite all of the incentives and probabilities. All of that makes one think that there must be a reason. I think that reason is the fact that the CC companies prey on people who are already financially stretched and who, further are fairly poor credit risks!
Wouldn't the IG CC model have to avoid those problems? Could it?
Mike
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