subject: The Strategy Behind Credit Card Deals [print this page] The Strategy Behind Credit Card Deals The Strategy Behind Credit Card Deals
Some companies give back part of the cash you spend, some give you gifts, while others give you special services. All these are offers from credit card companies which aim at two things. First is to attract new customers to use a credit card. Second is to retain the existing customers and rewarding their loyalty especially with so much competition and the constant benefits of balance transfers. Credit card deals help companies build a loyal customer base and often involve complex calculations, tie-ups and collaboration between many marketing entities.
Advantages Of Credit Card Deals
Most credit card companies seem to reward regular monthly payments thus encouraging it. Many may feel that part of the revenue of credit cards comes from the exorbitant interest paid by those with outstanding balances or dues not cleared before the payment date. But with the current market dynamics this may not entirely be true at all. In fact, it is possible that early repayment of dues by customers will save interest for credit card companies too, and waiting for customers to go beyond their payment dates is too big a risk, sometimes causing default and excess loss too.
Marketing Strategies
Come to think of it, the new model of credit cards actually works in a different way. Credit card deals actually encourage people to spend big. People who look at offers make purchases which they haven't planned for or haven't thought about purchasing. Even more important is that sometimes, these purchases are totally unasked for. In sort credit card deals help companies with better sales without spending much on advertising. This could be a good collaboration or tie-up between the credit card company and the brand offering the deal. It is a win-win situation for all as long as customers are aware of their purchases and do not go overboard with it.
Dynamics Of Credit Card Spending
These deals also help move the market. Slowly credit driven business increases the purchasing capability of some consumers moving the market and creating more employment. Hence the credit card dynamics is often more complicated than it seems on the periphery. With a greater percentage of people relying on credit cards for their purchases, the net sum of their credit limits can indicate the overall purchasing power of a community or a working class or a group of people within a specific salary limit on an average. This credit limit which is arrived at by the credit card companies based on salaries and regularity of payments is connected to the deals too.
Most people wouldn't spend anywhere close to these limits if not for the deals. All in all these deals interconnect many different commodities, from the banking industry, since every outstanding bill is in effect a loan, to the retailer industry, electronic industry, travel and manufacturing industry. Hence credit card deals represent more than small cash backs, reward points or even gifts. It represents an incentive to push the spending and expenditure of the customers which can work in either way depending on the sensibility of the customer.
