Stories
Slash Boxes
Comments

SoylentNews is people

SoylentNews is powered by your submissions, so send in your scoop. Only 19 submissions in the queue.

Do Credit Card Companies Screen for Behavioral Biases?

posted by cmn32480 on Wednesday September 07 2016, @07:55AM   Printer-friendly
from the thieving-bastards dept.

An Anonymous Coward writes:

There are substantial differences in the credit card offers that banks extend to different potential customers. Less-sophisticated borrowers receive offers with more back-loaded and hidden features, as well as more upfront rewards, visual distractions, and fine print at the end of the offer letter, according to Hong Ru and Antoinette Schoar in their new study, Do Credit Card Companies Screen for Behavioral Biases? (NBER Working Paper No. 22360). Banks also ratchet up these hidden features when their cost of funding increases, and when the credit risk of consumers is lower, which reduces the risk for the banks that customers default once they are hit with the unexpected charges. Hidden fees go up when state unemployment insurance benefits become more generous.

https://www.nber.org/digest/sep16/w22360.html

One more way in which Big Data is used against Little Guys.

Original Submission

 
This discussion has been archived. No new comments can be posted.
Do Credit Card Companies Screen for Behavioral Biases? | Log In/Create an Account | Top | 35 comments | Search Discussion
Display Options Threshold/Breakthrough Mark All as Read Mark All as Unread
The Fine Print: The following comments are owned by whoever posted them. We are not responsible for them in any way.

  • (Score: 0) by Anonymous Coward on Wednesday September 07 2016, @02:24PM

    by Anonymous Coward on Wednesday September 07 2016, @02:24PM (#398703)

    We all have cognitive blindspots. The less educated and the more financially stressed, the more obvious the blindspots. But Big Data is about discovering "hidden" interconnections. This story makes me want to know what are the banks doing to extract money from people who are better off? After all, you can't squeeze blood from a stone. The wealthier are more lucrative targets than the poor.

  • (Score: 2) by http on Wednesday September 07 2016, @03:28PM

    by http (1920) on Wednesday September 07 2016, @03:28PM (#398733)

    More money, but better defended. When overextended, poor people can't afford an advocate who can negotiate a credit settlement.
    When rich people get robbed by rich people, they don't get offended by the robbery, they get offended by being mistaken for a pov.

    --
    I browse at -1 when I have mod points. It's unsettling.

    • (Score: 0) by Anonymous Coward on Wednesday September 07 2016, @03:43PM

      by Anonymous Coward on Wednesday September 07 2016, @03:43PM (#398744)

      As a rich person I don't give a damn about being mistaken for a "pov" (is that like a chav?).
      I do get mighty pissed about getting ripped off.
      Being rich means I do have more recourse though. Which is a deterrent for anyone looking to rip me off.

      • (Score: 2) by Capt. Obvious on Wednesday September 07 2016, @11:22PM

        by Capt. Obvious (6089) on Wednesday September 07 2016, @11:22PM (#398912)

        Being rich means I do have more recourse though. Which is a deterrent for anyone looking to rip me off.

        Or incentive to rip you off more completely.