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posted by cmn32480 on Friday October 23 2015, @08:07PM   Printer-friendly
from the send-it-to-the-shredder dept.

Recently, MIT economists Hong Ru and Antoinette Schoar analyzed over a million credit card mailings collected by Mintel, a company that pays people to read their junk mail. The economists scanned the terms of these offers and noted the income and education levels of recipients. Now Jeff Guo writes in the Washington Post that if you want to know what credit card companies think of you, look at the junk mail you receive from credit card companies. Are you "pre-screened" for lots of mileage-reward cards? Banks think you're rich and educated. Do you mostly see offers for low-APR teaser rates? Banks think you're poor and uneducated — and, perhaps, vulnerable to financial traps.

Cards with travel rewards epitomize the kind of product aimed at the rich and educated. It's a fairly exclusive niche — only about 8 percent of credit card offers fall into this category. People in this demographic are the most likely to jet around, and therefore most likely to appreciate a card that will earn them frequent-flier miles. In contrast, the card offers sent to poorer, less-educated people were often loaded with risky features: low introductory APRs, high late fees, and penalty interest rates that kick in if you break the rules. Ru and Schoar believe that the system is tuned precisely to take advantage of those who make financial mistakes. "Backward loaded credit card features with high late fees can only be optimal [for companies] if customers do not understand their actual cost of credit," they write, using a term to describe arrangements that offer low upfront fees but higher penalty fees.


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  • (Score: 3, Insightful) by The Mighty Buzzard on Friday October 23 2015, @08:41PM

    by The Mighty Buzzard (18) Subscriber Badge <themightybuzzard@proton.me> on Friday October 23 2015, @08:41PM (#253787) Homepage Journal

    Zero? I read at -1 where only the brave and the bold go.

    --
    My rights don't end where your fear begins.
    Starting Score:    1  point
    Moderation   +1  
       Insightful=1, Total=1
    Extra 'Insightful' Modifier   0  
    Karma-Bonus Modifier   +1  

    Total Score:   3  
  • (Score: 2, Funny) by Anonymous Coward on Friday October 23 2015, @08:42PM

    by Anonymous Coward on Friday October 23 2015, @08:42PM (#253789)

    Can we limit it to just comments lower than zero, that way I can wallow in scum?

  • (Score: 2) by frojack on Friday October 23 2015, @08:47PM

    by frojack (1554) on Friday October 23 2015, @08:47PM (#253793) Journal

    Zero? I read at -1 where only the brave and the bold go.

    I'm not that brave.
    I only go there when moderating, and only then when its clear from the replies that someone got modded to oblivion by the thought police.

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    No, you are mistaken. I've always had this sig.