Part 3 – Revealing Credit Card Interview – Senior VP of Credit Approval & Risk – Reader Questions

Several weeks ago, I happened to be on a CSA flight from Prague (PRG) to Nice (NCE) (trip report later today), randomly seated next to a Senior VP, Credit Approval & Risk, at one of the largest US card issuers. Guess what? He also turned out to be a huge mileage junkie! We got to talking about our favorite flights, cabins, destinations, hotels, redemptions, etc., everything but credit cards. As nice as he was, I could not pass up the opportunity to ask him some direct questions about one of our favorite mileage earning activities – credit cards. He politely asked if I could send an email to his personal account with some questions, rather than discussing them on the flight. I previously posted part 1 and part 2 of his responses, and today we have his answers to reader questions:

othermike27 says:

OK, this may seem obvious to some of you, but I would like to hear:

1. What is the card issuer’s view of “churning” – repeatedly applying/cancelling/reapplying for the same card to receive multiple sign-up bonuses? Do the issuers try to stop this if they see it going on, or do they just ignore it as a fringe issue/cost of their business model?

To be frank, we are running a business and churning is not in sync with our our goal of building a long-standing mutual relationship. Why is it not mutual? We factor in one-time customer acquisition costs per product. If you are churning, then we are hit with those costs over and over, while you continue to cancel your card product. We now have controls in place to stop this from happening with regards to the same product type. In addition, we offer bonuses that are only provided after a yearly anniversary. 

2. Since most issuers seem willing to issue multiple cards to an individual, it seems that the issuers are encouraging a “portfolio” approach to such customers in the hope of capturing more of their business than they might otherwise. Can you comment on this?

We understand that our customers have multiple needs and therefore have a legitimate reason for obtaining different products. We are fully comfortable with a customer having airline, hotel, and banking rewards cards at the same time. 

Matt says:

My question is about piggybacking! Does it matter how old you are? I understand it has to be within the family because people used to sell piggybacking services, but is there an age limit? Additionally, does the person piggybacking have to report their ssn for this CS benefit? I’ve added my brother to my CSP, but they didn’t require a ssn. I WILL LOVE YOU FOREVER if this can be answered thoroughly!

Matt, prior to the mortgage meltdown, “piggybacking” was being heavily abused by credit repair services. We fully support family members adding minors to their account in order to help build credit history (and in some case even offer bonuses for adding additional cardmembers). There is no age restriction as far as I know. I’m not an expert here, but I’d assume if the SSN is not provided, then no history is being built. 

Tara @ Miles To The Wild says

Great post! I have a question if I may? In this day and age when banks are actively trying to recruit new customers with generous sign up bonuses; why do they penalize you when you take them up on the offers? In other words, assuming someone has a flawless credit history, high FICO, 100% on time payments (in my case for over 25 years)why do they deny you a credit card just because you took up some of these offers from other banks?

Tara, regardless of the factors you mention, a potential customer applying for multiple lines of credit in a short period of time is a very scary thing for us and view it as a clear warning sign that something may be amiss.

One more question: (I know Chase has a referral special going on now) Why do banks assume large blog owners produce the best new customers? In most cases, they give links to high-traffic blogs who encourage people to churn the cards. I intend to use Chase’s offer to recruit my friends and family, maybe my readers too. I wish other banks would give the same opportunities.

Tara, I can only speak for my institution, but we do not have direct relationships with any blogs. These are all handled via affiliate channels and each 3rd party site is fully vetted by our affiliates. We often run referral promotions rewarding customers for bringing over new customers. 

Related – What’s In My Wallet? Current Credit Card Offers

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