Sunday, October 3, 2010
Credit Card Companies STILL Encouraging Consumers to Overspend
Let's think about that for a moment. At first glance, what's the big deal? If the customer's card was declined outright, they were always able to request to have a lesser amount charged to the card and split the sale between two methods of tender if they wanted to. When I worked in retail part-time as a student, I saw that happen quite a bit. Some customers would ask ahead of time, before you ran the card; "Please put $800 on this card and the rest on that one." However, I also saw that having one's credit card declined outright at the point-of-sale, especially when the store is busy and there are other shoppers in line behind you, can be a rock-bottom slap-in-the-face wakeup call to a consumer whose spending has gone out of control. I like to think that some of those maxed-out shoppers went home and took a cold, hard look at their financial situation and perhaps began the hard work of digging themselves out. I don't know what the exact statistics are, but I'd guess that an awful lot of consumers walked away without purchasing when their credit card was declined, or at least decided to purchase fewer items to bring down their total. Now that the credit card companies will be issuing partial approvals, cashiers will be saying "Your card went through for $xxx. How would you like to pay the remaining balance?" instead of "I'm sorry sir/ma'am, but your card was declined." It's a subtle difference, but the only reason I can think of why the credit card companies would want to do this is to encourage consumers to go deeper and deeper into debt. What do you think?