Why being credited as a dream customer will pay off in reality
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During their year-end budget and performance reviews, guess whom credit card providers were chasing the most?
a) Madame Valai, a housewife who depends on her executive husband and well-to-do family for financial support. Paris, Milan, and Tokyo are her favourite shopping destinations, and she often spends half a million baht on luxury goods. She and her husband do not carry any outstanding balance on their cards.
b) Mr Woraphat, a middle-level marketing manager in a multinational advertising agency, single, a typical “salary man”. He has just bought his new car on loan, he owns all the new gadgets, and he travels overseas every year. He frequently applies for instalment payment plans on his credit cards.
c) Teacher Pimmie, who gives private lessons to groups of high school students five times a week, earning her cash which she diligently puts in a savings account. Her monthly income is probably higher than her peers’, plus she doesn’t have to pay any tax.
Many of you might pick Madame Valai or teacher Pimmie.
Of the three, Madame Valai has the highest spending power and probably relies on credit cards for big transactions, especially when travelling overseas. However, with her financial stability, she usually pays the credit card bills in full. She will not be interested in any offers of additional credit cards, quick cash, or other financial promotional schemes. She is, therefore, not who card providers are trying to woo.
Meanwhile, teacher Pimmie does not fit credit card operators’ criteria as her income is outside the workforce payroll system. What she earns does not qualify as a monthly salary. Therefore her name might not even pop up on a credit card telemarketing list.
Mr Woraphat is, actually, the ideal credit card customer. Despite his mid-range income, his car loan and instalment payments indicate that he has the potential to be a credit card revenue-generator.
He obviously has expensive tastes. Because of his stable job with a promising career path, he apparently has an exaggerated sense of financial security, believing that he will be able to pay off the debt – or at least the minimum payment due every month.
Mid-range office workers like Mr Woraphat are card providers’ favourites because of their stable jobs and spending habits. For instance, Mr Woraphat’s yearly travel plan is equal to an “occasional” big transaction, which means that there is always available credit line for him to spend more and more.
His choice of an instalment payment plan will glue him to a particular credit card. Once that happens, the card usually becomes his primary card.
His social status as a manager in a good company leads him to live a flashy life in order to fit in with his peers. Credit card loans give him both higher spending power than his actual income and build up his credit history. One day when he needs a bigger loan to set up his own business or buy a house, his financial record will help make his dream come true.
This is a win-win situation for both card providers and Mr Woraphat, as long as he is disciplined, because once he has a record of having debts, loan offers will pour his way. He just has to be very careful not to fall into those tempting financial traps.
Janejit Ladpli is vice president, Travel & Leisure Marketing, Krungthai Card (KTC).
