The commoditization in the credit card industry
According to the Brand Keys (www.brandkeys.com) Brand Survivability Assessment, American Express (# 20) is the only financial brand in the top 50 brands recognized by Americans . Credit cards have become a commodity. From a historical perspective, store credit cards were the "modern" thing when they were introduced as new and convenient. They provided an additional touch point for stores with consumers, and some actual continuity early on too. But in light of the introduction of more broadly used (and promoted) cards, like VISA, Discover, and MasterCard they have become relics. One of the many companies in the middle of all this commoditization is the New York, NY-based American Express Company. Not many years ago, most credit card offers arriving in your mailbox were barely a notch above other junk mail. Today it is common to receive a couple of offers each week; some with single digit interest rates and/or annual fee waivers. The companies are issuing offers with these mouthwatering interest rates and fees not only to get your attention, but to get your balance. Rather than wait for you to build up a revolving balance, some issuers offer special incentives to transfer balances from other credit cards. Consumers in the United States carry three cards at an average at any given point in time. Let’s see the pattern of commoditization in the industry. Credit cards were introduced by Diners Club in 1950. By the early 1960s, more companies offered credit cards, advertising them as a time-saving device rather than a form of credit. American Express and MasterCard became huge successes overnight, and by the mid-'70s, Congress had to start to regulate the credit card industry by banning such practices as the mass mailing of active cards to those who had not requested them. Battling with teaser rates and single digit, fixed, go-to rates in the main stream credit card market in the U.S. has driven the commoditization of...
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