Use Chase blueprint, get axed?
About a month and a half ago, I wrote a piece on Chase’s new blueprint feature that allows people to schedule their credit card payments in association with what they are buying. Chase calls it a financial management tool. I called it a lose/lose for customers, because it urges them to spend more on a higher cost card.
Today I came across another analysis of blueprint which has one insight that I found very interesting.
But for Chase, the implications of this data in aggregate are significant. Check out Chase’s internal presentation on Blueprint, which you can download here. Here, the bank says that the purpose of Blueprint is that it “allows customers to better manage larger purchases,” and ”track their spending history by category.”
This is crucial for Chase, because it allows the bank to better understand your financial situation. Before, they merely waited around, hoping you’d pay down your balance. Now they can see your payment plans months in advance, letting them know if it’s time to tempt you with a higher-limit card, balance-transfer offer or some other promotion. (Mint.com essentially makes its money the same way, by finding offers that might appeal to someone with your financial profile.)
Did you catch that? “it allows the bank to better understand your financial situation.” This means that Chase will have yet another reason to ditch you as a customer, reduce your credit line, or jack your rates way up … your own attempts at managing your debt are telling them you are a risky customer, even if you are making your minimum payments on time. Think I am wrong about this? The analysis goes on with more useful data:
The system appears to be working, for better or worse. Chase has been fine-tuning the product in the last few weeks, increasing the low-end rate from 11.24% APR to 13.24%, even as credit card delinquencies industry-wide dropped last quarter. That could mean that Blueprint is working a little too well, allowing card-holders to take on more debt than they normally would, resulting in higher delinquencies for that specific card. Or it means that the product has become popular with a more delinquency-prone crowd. Either way, if Chase is raising rates on this card enough to shake up the entire industry’s average APR, it clearly feels it needs to insure itself against something.
I hate to say I told you so, but that is exactly what I was pointing out in my original post, that Chase had engineered the feature to get people to take on more debt, not to manage their money better, like a true financial planning tool. Oh, and that expensive card just got more expensive as the higher APR attests to.
Bad bad Chase, Fees & charges | admin August 19, 2010
