Reply
Super Contributor
MidnightVoice
Posts: 8,154
Registered: ‎03-25-2007

Capital one story

http://www.huffingtonpost.com/chris-kelly/das-capital-one_b_53320.html

 

Back before Capital One, there were just two kinds of consumers: People who could afford credit cards and people who couldn't afford credit cards. The problem was that the people who could afford credit cards already had them, and the people who needed them were deadbeats.

The guy who started Capital One imagined a third kind of person -- someone who could almost afford a credit card. A virtual credit card holder. Something between a good risk and a social parasite. Someone who couldn't pay off the principal on a card -- only the interest.

- So?

That person -- that fluxoid -- is actually a better customer than someone who can really afford a card. Because interest and penalties are where the money is.

If you have enough data -- if you can find the exact right people -- you can make higher profits lending money to someone who can't pay you back than someone who can. As long as they can virtually pay you. In 2001 -- not the movie, the year -- more than one-quarter of the lowest income families spent over 40% of their income on debt repayment.

- But why is my mail always from one company- - Capital One?

Because the machine feeds on information. Capital One knows that data is power. Even when you don't respond, you're still telling them something. You're telling them what doesn't work. They invented the teaser rate, and honed it through trial and error. They did another test, dealing with customers who threatened to switch cards, and offering them computer-generated random new rates -- or nothing at all. They conducted 14,000 different tests in 1997. In 2000, they conducted 45,000.

- You're pulling this out of your butt.

And my Stanford alumni magazine.

The slide from grace is really more like gliding
And I've found the trick is not to stop the sliding
But to find a graceful way of staying slid
Moderator Emeritus
fused
Posts: 16,166
Registered: ‎03-12-2007

Re: Capital one story

Very good post!
New Contributor
cbjn1103
Posts: 144
Registered: ‎06-01-2007

Re: Capital one story

Absolutely 100% right on the mark. Everyone should on into their search engine and type in lawsuits against Capital One, and also go into FCRA website and see all the complaints on Crapital One. Not even FCRA can put a stop to their illegal activity.
 
CRA's could put a stop to a lot of things that Crap One does...like making them report cedit limits. But bottom line. Look at how much money the CRA's would lose if they prevented Crap One from reporting illegally. CRA's are a money hungry market as well.

myFICO is the consumer division of FICO. Since its introduction 20 years ago, the FICO® Score has become a global standard for measuring credit risk in the banking, mortgage, credit card, auto and retail industries. 90 of the top 100 largest U.S. financial institutions use the FICO Score to make consumer credit decisions.

>> About myFICO
FICO Score - The Score that matters
Click to Verify - This site chose VeriSign SSL for secure e-commerce and confidential communications.
Fair Isaac Corporation is a BBB Accredited Financial Service in San Rafael, CA
FOLLOW US Social Media Facebook Twitter Pinterest Google+