What Is A Good Customer?
From time to time I write about my experiences with the various credit card issuing banks. Whether it be in posts about Citi or Chase retention or a terrible customer service experience with Amex, I often describe how I try to be a good customer to the banks. More often than not someone chimes in saying that I am not a good customer or they ask what that phrase means to me.
To start, I’m quite sure I know who the banks feel are the very best customers. You probably know someone like this. They habitually have debt, but probably have a decent job and a good credit score. In other words, they pay all of their bills, but they carry a balance and pay interest. Yes, those people are the bread and butter for the banks. The banks make money on the swipes and even more money on the interest. I will never be THAT good of a customer.
“Bad Customers” (From the Bank’s Perspective)
On the opposite side I sort of think I know the kind of customer that the banks do not like. It is the person who is completely gaming them. The bank may feel that these people “abuse” loopholes or rules. In many cases what these people do is legal, but perhaps in an ethical grey area. Normally when the banks learn what these customers are doing, then their accounts are shutdown.
For example, lately Citi has been shutting down quite a few people’s accounts for abuse. Some of these people applied for multiples of the same card to get a bonus over and over while only keeping the card a month or two. Some of these people used “blind payment methods” where you pay your credit card through a 3rd party such as a bill pay service.
The vast majority of the people who read this site don’t fall into either of the above categories. Most of you have excellent credit, love to travel and have spent a lot of time learning the rules of the various programs and the details of the offers that the banks have for credit cards. You are the 1% of credit card consumers. You fit the profile of the bank’s biggest and best customers, but you don’t pay interest and you sign-up for a lot of cards.
So if you actually learn how to maximize the programs, strategically apply for cards within the bank’s published rules and don’t pay interest are you a bad customer? Some people would and have said yes. I say their line of thinking is ridiculous. So should you not maximize your return on the banking relationship? The truth is the bank’s have the house advantage and we should absolutely look out for our interests as long as we stay within the law and our own moral compass.
Being An Even Better Customer
I’ll admit that with certain banks I try to be an even better customer than is described above. For example, with a few cards I have small recurring charges (think Netflix) that don’t earn category bonuses. I’ve also been known to use a non-bonused card for small purchases when I am out and about. Maybe this makes no difference at all, but I feel it makes me a better customer.
I am also a customer of some of the bigger banks when it comes to other products. The truth is I need these other products anyway, so I might as well use the banks with good credit cards as long as it doesn’t cost me a premium. Yes, Chase has the best card lineup, so why wouldn’t I use Chase as my bank as long as I am not paying huge fees?
Your Value As A Customer
Awhile ago I wrote about how technology is our enemy in this “hobby”. That is simply the truth. The banks and all businesses for that matter are now collecting more and more data about us that can be used to evaluate our value as a customer. Technology is both helping businesses collect more data and helping them to analyze it quicker and more efficiently. Do we lose the banks money? Well, yes some of us do and they are now able to find that information out much quicker.
So what then can we do to stay on the bank’s good side? I don’t know the answer to that other than to say have a good faith relationship. I know that I will never be the very best customer of the banks since I refuse to pay interest, but I won’t be the worst either. Personally, I think that leaves me in a good place. On paper my credit and other factors make me an ideal customer. The truth is I am a statistical outlier because I study and maximize everything. I win more than most at the credit card game, but looking at earnings reports reminds me that the banks win too! If they find out we are winning more than them (i.e. losing them money), then the rules change. We have seen that quite often this year including last week with Citi’s churning change.
This is a topic that interests me a lot because some people think we are gaming the banks, but the truth is we are not. (Or most of us are not.) We are simply maximizing our return while playing their game with the rules they set. Yes, you are a customer and they make money off of you. Yes, you should expect good service or for them to honor what they promise and yes, you should be a good customer whatever that means to you, but remember that loyalty is not loyal. The banks are out to maximize your value to them and you should do the same.
What do you think? How do you try to be a “good customer” to the banks or do you not care! Let us know in the comments and please be respectful to others when sharing your opinions.