If this happens it is usually a sign that the card is being put into what is sometimes called “run-down” or “cash cow” mode.  In business terms this is when a product maximizes its revenues but minimizes its costs.  It is not unique to credit cards.

In the cash cow stage there is no desire to increase the user base of the credit card.  This means that as well as advertising being cut, interest rates increase and so the credit card stops appearing on the best buy tables.  Grace periods will also get shorter and penalties will increase if the terms and conditions of the credit cards allow for this.

In these situations it is better for a card holder to stop using this credit card and to find a card that offers better conditions.  If there is a high balance on the card then it may be a good idea to look for a “balance transfer” card, which is a card with a low (sometimes zero) balance transfer rate but on which no spending is done.

A good way to know whether a credit card is still being marketed is to look to see if it is easy to find on the card issuer’s home page.  If this is not found easily on the web site then it is very likely to be in run down mode.  Using a search engine will not always produce a useful result as the credit card’s terms and conditions page from the bank may very well appear at the top of the search as there is a lot less competition.

If the card used to appear in a best buy table and it no longer appears there, this is also indicative that the card is no longer being marketed.  The lack of introductory offers, when they were offered before, will also be indicative that the card is no longer being marketed.

It is very rare that a credit card company will announce that they are putting a credit card company in run-down mode until the very end.  Bankcard, for example was only actively offered by one bank when it was announced that the card was going to be discontinued.

One of the most common reasons for looking at the interest rate costs of credit cards is that they are looking to get control of their credit card debt.  The discipline of shuffling debt is a good start on the path of reducing credit card debt.

Consolidation loans can be a dangerous way of starting to reduce credit card debts.  This is because they increase a borrower’s capacity for debt as they clear credit cards of their current balances.  What this means is that if they continue to spend on their credit cards then they will see their overall debt increase.  Consolidation loans are often a good step in dealing with credit card debt, but usually at a later stage.

Consolidating, or shuffling, credit card debt can be a good move at an early stage of dealing with credit card debt.  This is when credit card debt is moved on to lower interest credit card balances.  There are a number of steps in doing this.

The first thing to do is to call each credit card issuer and ask for a lower interest rate.  If the credit card holder is regarded as a good borrower then it is likely that a lower interest rate will be granted, this is quite likely to be the case if there is a customer retention representative involved.
At the same time it is a good time to ask what the rate is for balance transfers and to see if this can also be improved.  If there is a good balance transfer rate then the borrower should ask for an increase in the credit limit.

After this has been done for each of the cards then it should be decided where the best interest rates are and to then start transferring debt to these cards.  The debts should be transferred from the highest interest rates to the lowest interest rates.

Shuffling credit cards can affect a card holder’s credit rating.  This is due to the fact that there is no credit outstanding on some of the cards and that some of the credit cards have all their available credit taken up.  The ratio of taken credit to available credit is an important measure.

At this point it is a good idea to start paying off debt from the most expensive cards and once a pattern of down payment has been established to look at lower cost cards or consolidation loans.

There is some truth in the myth that people tended to borrow less, particularly when spending on consumption.  In a time of stable money and low wage growth there was no logical reason to buy to consume.  

Borrowing to buy or build a house had always been accepted, as owning a house was seen as a vital part of self improvement.  In almost all states there was at some time a requirement to own property before a man could vote.  Many building societies were formed in order to allow people to save and borrow in order to build their own house.

Consumer credit became more popular at the beginning of the twentieth century.  This was through “hire purchase”, where a consumer could buy a large item – such as a car – in installments and at the end of this would own the product outright.  While they were paying the installments they could use the good, and they were also responsible for paying for repairs and damage to the item.

There was a premium on paying for a product this way, and this meant that many state governments started regulating this as credit.  It was many people’s first taste of credit.

Store credit also became more popular.  Many shops had always offered credit to good customers, as this was a way of attracting some of the highest spending clients.  This was done on a small scale, and even when there were chains of shops it was highly unlikely that a good customer at one could transfer their credit account to another shop.  However in the UK and America cards had become a popular way of keeping track of customer’s credit accounts and enabled a customer to be billed in various branches.  These evolved into the store card.

The first credit cards arose in California when the Bank of America launched a card that would become the VISA card, mass mailing the card to their customer base in much the same way that Bankcard – Australia’s first credit card – was launched.  A rival consortium of Californian banks also started offering what would grow into MasterCard.

Pattern recognition is simply analysis of a large number of credit card transactions.  It comes in two forms, firstly pattern recognition searches for positive signs that the card is being used fraudulently and it then looks for differences in the way the card is being used from its normal pattern.

The patterns that credit card providers use to spot potentially fraudulent transactions are a number of purchases that are very close to the credit limit, buying a large number of items that are easy to sell on to another person and so convert into cash or physically using the card within minutes at two places that are very far apart.  These objective signs are very easy to spot, and many credit card fraudsters tend to be aware of the dangers of following this behaviour.  The quick wins that have come from spotting this behaviour have already been won.

The next stage in the battle against credit card fraud has been to look at sudden changes in spending patterns.  This is far harder for a credit card thief or fraudster to avoid unless they know the card holder very well and even then there may be some differences in expenditure.

The credit card companies use various types of fuzzy logic to analyse past transactions and build up a pattern of behaviour.  This is not just to judge the sort of purchases that are made, but when and where these purchases are made, the frequency of these purchases and whether a credit card is used.  Thus with every new transaction there will be a certain number of points that are added to the transaction for how far it is out of the pattern.  Most transactions will have a small number of points.  When there are a large number of points that have been amassed in a short period of time, which can be as short as a day, then a number of measures will be taken including contacting the card holder and suspending the card.

Going on holiday can be a particular problem here as not only are there a large number of atypical purchases being made in a short period of time, but they are being made in another country.  In these cases it is often a good idea to phone up the card issuer in advance to warn them about the upcoming holiday, particularly if holidays are unusual for the card holder.

After the credit crunch many credit card companies were criticized for advancing credit to people who did not have much of a chance of paying the money back.  This was because credit card companies were solely relying on what people said on their credit card applications.  Income estimation is a way of double checking the income to ensure that the card can be repaid.

Income estimation uses various factors to check whether the income that is given on the application is broadly accurate.  This includes the credit record and information about the employment.  There are a number of databases that income estimation can access.  The idea with income estimation is not to second guess the income but rather to see if the income given in the application is considerably out of line with the details given by the applicant.  If there is a considerable discrepancy then further details are requested, such as pay slips or bank account statements in order to verify the figures that have been given on the application.

Income estimation was first developed in America when card issuers were similarly criticized for relying too much on the information given in credit applications.  Credit card applications commonly overstated income and so many borrowers had more debt than they could cope with when there was a down turn in economic conditions.  The criticism was made that many credit card providers were well aware that the income figures were often inflated, but that they were still lending regardless.  It was proposed that these lenders should only be allowed to lend if they had seen evidence of income, such as pay slips.

This would have considerably slowed down the process of applying for a credit card.  In order to forestall this, a number of credit rating agencies developed an income estimation model in order to find when a borrower had a large discrepancy between their income and available information on their income.  If there was no large discrepancy then the applicant could be fast tracked as before, if there was a discrepancy then the applicant would be asked to provide more information.

This method is relatively crude in Australia as there is no access to tax records.  However it is being used by a growing number of card providers in order to cut down bad debt on credit cards.

If a card applicant is told that more evidence is needed then they should provide evidence such as bank statements, tax returns or recent pay slips.

Different cards have different features, so it stands to reason that they should have different uses. While some cards have a low interest rate on balances, other cards have a low interest rate on purchases or a high amount of cash back.  An example of this is when a card has a low interest on balance transfers but has a higher rate of interest on purchases.  In this case it is a good idea to not spend on the balance transfer card.

One area where cards should be differentiated is when a card relates to an employment.  This may be a card that has been given by an employer to cover work expenses or it may be a reward or cash back card that is used to cover work expenses that are then claimed back.

Introductory offers are another reason for having multiple cards.  Introductory offers allow a user to benefit from very good features of a card for a very short period of time.  Some examples of this include a low interest rate on purchases or an increased discount on some goods

One particular way in which people can benefit from introductory offers on credit cards are the zero interest rate balance transfers.  These allow for a rate of 0% for a short period of time, usually between three and fifteen months, on a transfer of a balance from another card.  A variant of this are low interest rate balance transfers.  It is possible, by constantly changing cards, to have either low interest or no interest on a substantial amount of money for a long period of time.  The caveats are that the cards need to keep changing and that no purchases are made on these cards.

It is necessary for a credit card holder to cancel unused credit cards if they wish to continually take advantage of these introductory deals.  These are only provided to new customers and it takes about twelve months after cancelling a card to be recognised as a new customer.

The credit record is affected in two slightly contrasting ways by taking out a number of credit cards.  On the one hand a large number of credit cards held, or a number of credit cards applied for in a short period of time do negatively impact a credit record.  On the other hand credit reports look at the credit utilisation ratio, which is the amount of credit offered divided by the amount of credit taken, to judge whether an applicant is a good credit risk.  Having a number of cards increases the spare credit available, which boosts a credit score,

One large advantage of the credit line is that it comes with no set up fee unlike many of the larger credit lines.  This means that the Diners Club credit line can be cheaper than many other credit card offers with higher interest rates.

The credit line is actually loaned by Citibank rather than Diners Club itself.  Citibank is one of the largest banks in the world, and in Australia has a market presence that aims for affluent business travellers, the sort of people who belong to Diners Club.   Existing Citibank customers also tend to be excluded from any Diners Club credit line promotions.

The credit line can be accessed through the use of the payment card.  The card also has EFTPOS functionality.  There is also a cheque book that can be used to access the credit line.   Cash can be taken out through ATMs, although ATM fees will apply.

Diners Club offers a number of benefits for using their card.   There is a well developed rewards point system where purchases using a Diners Club card are rewarded with points which can then be redeemed against other items.  Travel Insurance is also offered as is membership of Diners Club’s Cellar Door wine club.

Diners Club is the oldest charge card provider, having been around before American Express, VISA or MasterCard.  Although there were some store cards available before Diners Club, Diners Club was revolutionary in that they offered the benefit of easy payment across a number of businesses, although they concentrated on restaurants and were initially strong in the New York area.

Reward cards are cards that pay back a card user a proportion of the money that they use to purchase goods on their card with.  This is sharing the proceeds of the merchant fees that are charged to shopkeepers for each transaction with a card user.

A common way of rewarding card users is through cash back, where a credit card user will simply be paid back a proportion of their monthly spend.  This usually averages from 0.5% to 1%, although there can be higher offers of up to 5% when there is a temporary introductory period.  Many petrol cards use cash back as a way of rewarding their users.

Another method to reward users is to give rewards points to the card users.  These will be used against a selection of goods that are available for a certain amount of points.  This is another method that is used with petrol cards.

Most petrol cards have a small level of rewards available for general purposes and they then increase this amount when the card is used to buy petrol.  Thus a petrol card may have a reward for a normal purchase and then have a higher reward for a purchase at a petrol station.  In most cases the enhanced rewards cover all purchases at a petrol station, but some – particularly the tied cards limit the enhanced rewards to purchases of petrol.

There are two types of petrol card, a tied card and a generic card.  A tied card, also known as a branded card, will be branded with the name of the petrol station chain that offers the rewards and the enhanced rewards will only be available at the chain of stations.

Generic cards also offer enhanced rewards for petrol purchases but they offer lower rewards for each dollar spent on petrol.  Some of these cards also offer enhanced cash back with other types of goods such as groceries.

Even with generic petrol reward credit cards there may be some stations that do not qualify for enhanced rewards. This can be the case with either small independent stations or those tied to supermarkets.  In these cases it is hard to tell that the petrol station is in fact a petrol station or to separate the purchase from non-eligible purposes.

Gold and platinum card holders were having a problem in that they were stockpiling too many rewards points.  This was because they did not tend to take many flights, which other card users tended to use most of their rewards points on because they were already frequent travellers for business purposes so they tended to be less influenced by the chance of getting another flight and any flights that they or their family did want to take tended to be paid for by a more generous airline frequent flyer programme.

Other rewards that tended to be offered were seen as not being as attractive to this more affluent part of the population as they were to the mass market, for whom the rewards programmes tended to be aimed at.  This led to a problem with selling the high end gold and platinum cards, many of the people who made up its target market did not see what reward they were getting from it.

One of the recent successes of the gold and platinum card offerings has been concierge services.  These are services where it is possible to get a personal assistant at the other end of the phone to carry out many of the menial tasks that can take up a large amount of time when added up, such as booking restaurants, personal shopping or arranging flights.  Out of the concierge services grew tailored reward programmes.

Essentially a tailored rewards programme means that a card holder can name a reward that they want, for example a luxury holiday, and this can then be priced first in dollars and then in reward points.  The amount of rewards points is then taken off the balance of the card.  If there are not enough rewards points to pay for the tailored reward then the card holder will be able to pay for the difference.

The research on what elements are needed to be purchased, whether they are covered in the card policies and how much the whole experience costs will be done without charge by the concierge service.

This means that card holders can pay for luxuries that they would not otherwise consider as they would feel that the spending is frivolous.  This means that there are restrictions that are made on what the rewards points can be spent on so that they are not spent on necessities or investments.  However these restrictions tend to be quite narrowly drawn.

Credit unions were started in continental Europe in the nineteenth century.  They were set up originally to help smaller farmers who were not well served by banks and who could be ruined by high interest rates.  Unlike banks they tended to be set up where the farmers were and were often run by other farmers on a part time basis.  In many countries they also tended to be Catholic, as they were originally founded to enact Catholic social teaching.  In Australia they have quickly grown, being particularly popular with both farmers and within workplaces.

Credit unions tended not to issue credit cards for a number of reasons.  Firstly their main difference with banks had always been that they offered low interest loans, and credit card debt had borne some of the highest interest, due to their administrative cost and the unsecured nature of the debt.  They also tended to offer very simple products, as this was a way to keep their costs down, and credit cards are quite hard to administer.  Finally they were not part of the Bankcard consortium, the consortium of large banks that had introduced the first credit card in Australia.

Recently credit unions have been a growing segment of the credit card market.  This is largely because the world’s largest credit card processors, VISA and MasterCard have extensive experience of dealing with small financial institutions and so credit unions were not problematic.  Credit unions, building societies and smaller regional banks were also a way around the stranglehold the large banks had with Bankcard.

Credit unions rarely have market leading deals.  The credit cards are intended for their current customers and perhaps to be able to cross-subsidise their less profitable operations.  They are not intended to grow the customer base or deliver enormous profits in the same way that bank cards are designed to do.  For similar reasons they rarely offer non-standard cards.

Some credit unions can restrict the issue of credit cards to people who have been members for a period of time.  The credit unions themselves can also have membership restrictions, either requiring that a person lives in a certain area or is employed by a certain employer.  Recently that has been fading, particularly among the larger credit unions that have opened their membership to all Australians.

Another unusual aspect of credit union issued credit cards is that it is sometimes possible to appeal against a refusal to issue credit.  This is because the credit union is run by trustees and not by professional directors.  However it may often be the case that a successful appellant is referred to a debt counselling course as a condition of being granted a credit card.