Credit cards – breaking the mould

In recent times the credit card industry has done little to encourage customer loyalty, preferring instead to pursue new customers with a wide range of enticing introductory deals, such as 0% balance transfers, 0% purchase or enhanced introductory cash backs.

Meanwhile, existing customers were largely ignored and, unsurprisingly, the credit worthy ones decided to take advantage of these deals and switched cards on a fairly regular basis.

Against this backdrop Capital One has announced an initiative which is a genuine attempt to engender loyalty within its current customer base, as well as an initiative designed to win new customers.

By registering online, Capital One’s credit card holders will get free email alerts from Equifax notifying them of any key changes on their credit file. This will include details, within 7 days, of any applications for credit that have been made with or without their knowledge. They will also get two free full credit reports each year.

David Black, Principal Consultant for Banking at Defaqto said: “Credit card providers are facing testing times at the moment with impairment losses, capped default charges, the credit crunch, pressure on payment protection insurance sales, a highly competitive market and uncertain economic conditions all stacking up against them.

“I’m genuinely impressed by Capital One’s introduction of a free identity alert service which differentiates their cards from the opposition and should encourage customer loyalty.

“Looking forward, I would expect to see further examples of added value services or facilities appearing from other credit card providers. These could take the form of linked incentive accounts, more valuable incentive schemes or specifically targeted offers at niche market segments. The rationale is simple: encourage credit card loyalty by offering something worthwhile as a possible prelude to the later introduction of annual charges.”

Black added: “The current account market has seen the widespread promotion of paid for added value accounts, and it is possible that we are about to see the emergence of a similar phenomenon in the credit card market.”