How Closely Are Credit Card Companies Keeping An Eye On You?
Recently, a the first phase of the credit card bill got activated. Although these initial legislations are not as substantiative as the other legislations included in the credit card bill are, they are still causing a lot of waves in the credit industry. Most consumers are also already counting the days to February of next year, in anticipation of the activation of the full extent of the credit card bill.
But there is another date that credit card holders ought to be marking in their organizers: the 22nd of May in 2010.
You see, one of the legislations included in the credit card bill calls for a study of the practice of the credit industry called “credit profiling”. As a consumer, you are probably aware that major financial companies keep a keen eye on your spending practices. After all, this is where your credit score comes from. You might also be aware that credit card companies are continuously collecting data regarding your, and several other credit card holder’s, spending habits. Credit card companies analyze around millions of credit card transactions that pass through them every days. Some of these analyses are targeted at determining the credit worth of every credit card holder that they have.
For most credit card companies, this practice is only them being smart. They believe that they can track a credit card holder’s financial situation through his or her spending patterns. To them, certain key changes in your consumer habits are signals that you are edging into the realm of financial trouble. From this, credit card companies then make decisions which affect you directly such as changing your credit limit to a lower amount or increasing your interest rate.
At the moment, it is still largely unknown what triggers credit card companies keep an eye on. Also, it is still unclear how much a factor does “credit profiling” play in determining if you, as a credit card holder, are a credit risk or not. There are some speculation that activities such as charging purchases from low end stores, using credit cards for gambling, posting bail with credit cards, making cash advances out of the blue and similar practices are triggers for credit card companies.
Aside from determining your credit risk, “credit profiling” also has an even more sinister side. With the data that credit card companies gather regarding your spending habits, they can easily engage in what is referred to as psychographic behavior analysis. With this, credit card companies can be much more accurate in their targeted marketing towards you. There are also speculations that credit card company can use these to psychologically influence you through their communications with you for their benefit.
