Are Credit Card Companies Predicting Divorces?
Credit companies are using information gained from transactions to predict large life events that might impact consumer activity. One of those life events is divorce, and credit companies want to guess when that might happen, according to an article in The Daily Beast.
Credit card companies have access to a lot of data about the people who use their cards. All manner of transactions go through the credit card companies’ systems, and they do what they can to use it to their advantage.
Credit companies want to sell more services and products, and they want to know what the likelihood is that consumers will pay off their outstanding debt. They are willing to use the data to achieve that goal.
When it comes to divorce, if a credit company can predict when a consumer might be nearing a divorce, they can better evaluate whether someone will be paying off their credit card bill. People going through a divorce are more likely to leave a balance on a credit card or miss payments. When domestic trouble translates into an impact on the credit company and its financial interests, then they want to be able to predict it.
For companies that specialize in and depend on risk management, divorce is a potentially serious risk.
In his book “Super Crunchers,” author and professor at Yale Law School Ian Ayres discusses the strategy used by the credit companies. He told The Daily Beast that “credit card companies don’t really care about divorce in and of itself—they care whether you’re going to pay your card off.”
The methods that credit companies use to track this information is confidential, and guarded tightly. Visa told The Daily Beast that it “does not track or monitor cardholder marital status, not does it offer any service or product that predicts a potential divorce.”
Increasingly, though, easily accessible data is enabling companies to predict the lifestyle choices and behaviors of consumers. Predictive modeling can use one set of data to answer a seemingly unrelated question. Purchasing information, for example, could provide information about whether a consumer has recently relocated. This data could then be used to offer products aimed at consumers who have just moved.
Credit card marketing partnerships can be well-served by knowing such biographical details about potential customers. If a customer has just moved, for example, a credit company could inform a marketing partners that might be a home refurbishing business.
“There’s a whole market out there that has tried to predict whether someone has just moved, and to be first with offers,” according to Bob Grossman, the director of the Laboratory for Advanced Computing at the University of Illinois at Chicago.
The Daily Beast makes sure to note that crunching numbers for strategic purposes is a trend taking hold in business at large, and that the credit companies are early adopters. Tools to analyze data are more sophisticated, and therefore more insight and analysis can be drawn from the data.
Whether or not the credit companies know about an impending divorce, one can be sure that they are working hard to make the information at their fingertips profitable.
