Credit Cards and Market Intelligence

The other day I ran into a link to this NY Times article about credit card companies using information about what people buy to attempt to "profile" customers and see who is likely to default on their consumer debt. I'm not sure if I'm particularly cynical or hard hearted, but I don't find myself as shocked as I gather the author is that credit card companies would do this. Credit card debt is unsecured, and so if someone declares bankruptcy, they often get almost nothing. Because of this, credit card companies are often willing to write off 50% or more of what someone owes in order to keep them from declaring bankruptcy.

Clearly, at that point, they face a huge amount of risk. They make up for that with interests rates much higher than you'd pay on secured debt, but even so I find it hard to blame them for wanting to gather what information they can based on customer activity to decide whether to extend someone more credit, or rein them in.