Question

In: Finance

What type of a customer is a good fit for (1) a premium credit card, (2)...

  1. What type of a customer is a good fit for (1) a premium credit card, (2) a rewards credit card? What type of a customer is a good fit for a card with (1) a low APR, and (2) no annual fee?

Solutions

Expert Solution

A premium card is suitable for a high net worth customer where they require specialized services and you are able to provide customized service to the customer like Cash on demand though credit card or transaction in different currencies.

A reward credit card is more suitable for a customer where the customer is loyal and you want to retain him and encourage him to use more of your credit card. Like a person with middle income group and rewards can be discount on purchase of grocery when the payment is made through credit card.

The low APR is suitable for a customer when the loan amount is huge because then you can make up to at certain extent and the customer has high credit score. Somebody who is using his credit card for transaction which is quite high but default rate is very low.

No annual fee is again provided to customers who do large transactions in a year and have high creditworthiness so the company is able generate revenue from other transactions to make up for the loss of annual fee.


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