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Super Contributor
Posts: 8,198
Registered: ‎03-25-2007

Capital one story


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
Posts: 16,385
Registered: ‎03-12-2007

Re: Capital one story

Very good post!
Credit Profile - FICO 08 Scores (03-26-2015): EQ 814, EX 817, TU 822
All three scores were 850. Lost points for not having an open installment TL. So, BE WARNED!!!!!
Credit History: 27 years ~ AAoA: 13 years ~ Util: 1% ~ Inqs: TU 1

Credit Cards: Amex BCP ~ Amex Clear ~ Amex Platinum ~ Barclay Ring World Mastercard ~ Chase Freedom Signature Visa ~ CITI Dividend World Mastercard ~ FIA Fidelity Investment Platinum Visa ~ First Hawaiian Bank Gold Visa
New Contributor
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 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.

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