Credit-card companies should stop chasing “credit-card tarts” and start building customer loyalty, says Morgan Stanley consumer marketing director Patrick Muir.
The call to action comes as the American financial giant launches its ultra-premium credit card i24. The card is aimed at high earners in the UK who are tired of overtly “prestige” branding and it has been billed as the alternative to the black Amex card.
Muir was part of the marketing team that devised and launched the Prudential-owned Egg card, which introduced nought per cent balance transfers in the UK and spawned a host of imitators. However, he says the market has changed and that card companies must focus on offering credit for purchases rather than acting as pseudo-loan companies.
Muir says: “Credit cards should be about payments rather than debt. Businesses have become competitive, they are acquiring balances and not customers any more. But with balance, you may retain customers for six, nine or 12 months, then lose that customer to a rival offering a ‘new customer’ deal. That’s a bizarre way of carrying on.”
Many of the companies offering nought per cent interest have levied fees on people transferring balances to mitigate against the “credit tart” problem.
Muir predicts that more companies will bring back annual fees – not just premium products such as the i24 – and feels this is a way of regaining consumers’ trust.