Economist and credit-card crises

Daniel Finkelstein tells a good joke about economists. At the airport, a man rushes up to a group of waiting passengers in the lounge and shouts "is there an economist here?". One person stood up, puffed out his chest (always having wanted to help out in an emergency), and says "yes, I'm an economist". The man looks at him with a mixture of contempt and bewildered surprise. "The magazine", he said, slowly.

In other financial crisis news, some credit card companies are paying their customers to go away. According to an article in the New Yorker, aptly titled House of Cards, American Express is offering some people $300 to pay off and close their accounts. Unfortunately for me I am one of those people who always pays off her bill each month (it almost entirely consists of credit with Ocado and Amazon, with a dash of Typepad), so no chance of making a quick shilling or two there. Credit-card companies don't like customers like me, and they don't like customers like the ones they have just paid off, either. They like most the "revolvers", customers who have relatively high debts, pay off only a little each month, but who don't default by going broke, as explained in the New Yorker piece. The challenge for the companies is to identify and encourage the revolvers who aren't going to go bust, milk them for all they can get, while getting rid of the rest of us pesky defaulters and non-indebted. Maybe if I keep paying off my monthly balance and the global recession continues for a while longer, they'll offer me a payoff, too?

3 thoughts on “Economist and credit-card crises

  1. What those credit card companies really like Maxine is the young graduate who they can justify giving too much credit with the knowledge that their parents will pick up the tab. :o(
    Of course there are cheaper borrowing options than credit card companies such as the Camorra and the Mafia who would not have the chutzpah to charge their rates of interest.

  2. Norman, that is a really scary first sentence, given the age of my elder daughter. Mind you, she’s more sensible than me with money…..so far….she hasn’t actually left home yet. I won’t, however, refer her to your second sentence😉

  3. Maxine, you’ve just explained what is so odious about these financial institutions. I’m with you on credit cards, and I do feel that the maniacal hunger to get into debt is the cause of the current economic woes, and the reason it will take us a long time to escape them. But perhaps I’m too pessimistic….

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