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Credit Card Profitability, Insurers ask advisors for your Data


Moneylife: IFAs being poached by insurance companies to reveal your data. If you aren’t sick of stupid SMSes, get ready to be.

But another article is perplexing. Credit cards, they say are not profitable:

According to reports, there are about 26 million (2.6 crore) card users in India with an average person’s wallet containing at least one debit and credit card. However, out of these cards, only 50% are active or in use. Out of the active users almost 80% or about 1.04 million (10.4 lakh) users are not paying any interest on their credit cards, leaving all the issuers with just 260,000 (2.6 lakh) users from whom they can earn some money.

Interesting numbers on credit card users in the country. But the math is all wrong – 50% of 2.6 cr. users is 1.3 cr. 80% of that is 1.04 crore – not 1.04 million. This is not a misprint – it’s repeated by using lakhs!

And even if you take the fact that 80% of credit card users not paying interest, come on – they earn 2.5% of every transaction from the vendor! Okay, the visa types take 1% but they still make 1.5% for the 45 days they give you the credit for. It’s not “unprofitable”, they are incompetent. If you make losses where you charge 36-40% interest, you’re really scraping the bottom of the barrel. 


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