Posted by Sir Four at 1:05pm Jul 28 '09There must be some actuarial statistics showing they can profit by raising the limits. A formula must weigh the risk of default against the gains from interest. But I am surprised they've continued raising limits in these times. My credit card company has practically tried throwing money at me, sending me blank checks "to use however I want" which are really just cash advances that will ultimately get slapped with high interest. But man, in the wrong hands those must be dangerously tempting.
I've had only the one credit card for over a decade, until very recently (I took a second card for promotional savings). The limit is around $18,000 now. And a comically low $1,300 on the second card.
As to your ethical question, I do agree that any formula that can accept X number of people going into bankruptcy for you to maximize your profit is unethical, in no uncertain terms. But free market purists will argue that failure to maximize your shareholders' return on their investment is unethical.
I've had only the one credit card for over a decade, until very recently (I took a second card for promotional savings). The limit is around $18,000 now. And a comically low $1,300 on the second card.
As to your ethical question, I do agree that any formula that can accept X number of people going into bankruptcy for you to maximize your profit is unethical, in no uncertain terms. But free market purists will argue that failure to maximize your shareholders' return on their investment is unethical.
Re: I have $49,000 worth of credit - Sir Four