Lecture 6 - Credit Card

Question 1

Why is credit card important to the bank?

Answer 1

1. Profitable - due to volume and interest earned on ‘roll over’ balances
2. Dynamic marketing tool - due to strong appeal for new customers & build customer loyalty
3. Effective tool - for promotional offers, discounts & other customer incentives
4. Gather customer profile - to build targeted database for mailing list & segmenting most profitable customers

Question 2

What is balance transfer facility?

Answer 2

It allows cardholder to transfer outstanding unsecured debt balances with other banks to their credit card to enjoy lower interest rates.

Special rates apply for a limited period & will revert thereafter to usual rate.

Special interest rates apply only to transferred balances & not amount charged to the card.