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Industry News Banks look to do it yourself credit cards for customer loyalty solutions 2010-04-12 For banks that are tussling with the problem of how to prevent customer attrition, some experts say they should try put the customer in control where possible. A growing number of banks are ramping up the availability of so-called do-it-yourself credit cards, which give consumers power to customize financial terms such as annual percentage rates, annual fees and reward structures, according to a recent report at CreditCards.com. While many banks have dabbled in cards that are personalized in design, do-it-yourself cards go beyond the cosmetic, providing for financial flexibility. The report says that leaders in the banking industry see the cards as tapping into popular sentiment against rising default rates, which have highlighted the importance of consumers understanding the specific terms of the cards they carry. In addition to consumer demands for more control and understanding, the cards fill the need for transparency that was outlined by the Credit CARD Act of 2009. President Barack Obama signed in the law to keep card issuers accountable to their customers with one requirement calling for credit card issuers to inform consumers 45 days in advance of a significant change in card terms. In addition, the cards are in demand because the current economic downturn has reminded consumers of their need to keep track of how their finances are governed. Industry consultant James Walsh, president of Brookwood Capital, tells CreditCard.com that these conditions have made do-it-yourself cards enticing for card holders because they create a sense of confidence and control. "A lot of these things are spawned from a greater awareness by the consumer of what's going on with their credit cards, as well as much greater awareness on part of issuers that they need more transparency," says Walsh. "Usually these things are easy to understand. If you understand it, you can pick a card that's going to, for instance, not get you into trouble." Although many banks have promoted do-it-yourself cards in recent months, according to the publication, the concept has been around since 2007. In that year, Capital One launched its so-called Card Lab, which it advertised on TV as being flexible, while the Turkish bank Garanti also produced a do-it-yourself card, which it says has 9,000 different financial combinations. For card issues, CreditCard.com says, one appeal of the do-it-yourself credit cards is the opportunity to engage with customers, which can kick off a positive relationship that can lead to more customer loyalty. The article cites studies by financial research firm the Aite Group that show interacting with customers and then asking them to make a decision leads to a higher level of trust. Ron Shevlin, a financial analyst for the Aite Group, says that a do-it-yourself credit card would be a great start to a customer's experience with a bank. "It's starting the relationship off on a better foot than it often does," says Shevlin. "If a consumer says, 'Yes, this helped me make a smart decision,' it's good for the issuer and the consumer." With do-it-yourself credit cards, bank customers don't have to settle for a package that is aimed at the average customer, the article says. Although there are trade-offs involved, the cards allows customers to choose plans that suit their lifestyle in terms of APR rates and rewards programs. The growth of the do-it-yourself card trend comes at a time when overall credit card use is on the decline. According to UPI.com, the Federal Bank found that credit card use in general decreased by 20 percent in 2009. At the same time, Equifax reports that new credit card account activations dropped by 46 percent during the year. 
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