What your credit-card offers say about you–Antoinette Schoar

MIT Sloan Professor Antoinette Schoar

From The Wall Street Journal 

Do the credit-card offers you receive in the mail have photos of enticing holiday destinations and reward miles? If so, you should be flattered, since this means that credit-

card issuers believe you to be highly educated and financially sophisticated. But if you are receiving card offers with low teaser rates for introductory APR, you might take offense, since card issuers most likely do not view you as savvy.

As more and more personal data becomes available, businesses are now able to target customers in a personalized and sophisticated way.  On the bright side, that means you can get products and services that are tailored to your needs. As a result, you are much less likely to get catalogs featuring dresses your grandmother might wear. But, according to our research, the downside is that companies can also more effectively target your behavioral weaknesses, self-control issues or lack of attention to the fine print. We find that credit-card companies tend to offer those customers who are least able to manage the complexity of credit-card contracts, the most complex features and hidden charges.

Read More »