Credit Cards Aren’t as Competitive as They Want You to Believe

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Credit cards are a business which is not only big but also growing at a good pace. There are a lot of big companies in the field and spending millions of dollars on advertisements and call centers to promote their products and bring more and more people in their fold. There is a lot of pressure selling and many benefits are offered to the perspective clients as well as the existing users of credit cards of the other companies. Whole lot of media and web services are being used to entice the new users for the credit cards showering a lot of freebees in the form of reward points which can be en-cashed for a whole range of goods and also free miles for journey across the world.
Target customers
It has been observed that in developed countries, the number of cards issued is sometimes as high as double the population. In all such cases, one wonders as to why there is still lot of hue and cry regarding creation of new clients by every company and why at all such a vigorous campaign is being carried out by every company to add new customers to their existing client base. On deep analysis the result is that ultimately everybody is trying to entice the customers of other credit cards.
Very typical competition
Like any other industry, it may look on the face of it that a fierce competition is good and beneficial for the customer and the card holders can keep switching service provider for endless benefits. But as a matter of fact there are not much switchovers to competitors. The reason is that normally there are two kinds of card holders. The first kind would always pay their dues every month and would not be bothered about the interest rates being charged by the service provider because they never have to pay the interest whereas the other kind would be the ones who have already reached their limit with the existing service provider. It is the second type who would like to switch the service providers whereas the competitors would always target the first kind because the second type are already in the risk zone so far as the repayment of dues of the service provider is concerned.
The switchovers are rare
In spite of the fact that there is a strong competition amongst many service providers and everybody is trying to woo the good customers with lot of offers of lesser interest rates, more reward points on each purchase and no annual charges etc., the switchovers are rare. There are multiple reasons for the same. Almost fifty percent of the card users even do not know the exact rate of interest being charged by their present service provider. Also, with the switchover of credit card, one loses all the accumulated benefits, which may be a big loss to a good card holder. The credit rating of the person also goes down with the past history being deleted with the change of service provider and hence the rate of interest for other borrowings may also go up. All these factors ultimately lead to resistance in change-over to other service providers.
Sarah Singh is a famous author. She is also an avid blogger. She has been writing on various topics like Finance, Loan, Credit card and loans for business.

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