Same thing. You don't pay your bills (ie bad debtors) then you are unprofitable. Their model was built originally on people paying off their balance completely every month, they did make the move to change that, they saw that it was unprofitable because of bad debtors, thus, they go back to what works. Good business move.
No, they are not the same thing.
Unprofitable customers include those who pay their bills off in full each month and consequently don't accrue finance charges, who utilize low-rate balance transfers (1-5%), and/or who don't generate fee income.
Those customers are not bad debtors if they are in compliance with the account terms and agreement.
As I said, during the height of the credit boom, banks like AXP were throwing credit cards around with 3.99 percent and 4.99 percent fixed-rate life-of-the-balance offers with zero fees. Now, in the current economic environment, having customers who utilized those offers and are paying just the minimum each month...is simply unprofitable for AXP. But, just because a customer is unprofitable, based on a certain standard of profitability, does not mean the customer is bad.
They got a good spanking in about 1992 after they introduced the Optima card, not having the proper experience managing revolving credit. Economy went south, credit losses went north.
Not quite! - The accounts they consider unpropitable are those that seldom have a large balance, and pay off the account each month.
You’ve got it exactly backwards.
In the credit card industry, the responsible people who pay off their balance IN FULL every month ahead of the due date are known as “deadbeats.”
Yes, really.
The credit card companies make huge money from the people who:
a) pay the minimum payment every month,
b) and carry a substantial balance,
c) have only one or two late payments a year, which jacks up the APR on their cards and adds late penalties to the account.
The card companies positively HATE people who either have a no-fee card and don’t use it often, or who do use it and pay it off every month. The only money they make on such cardholders is about 3% transaction fees on every transaction.