How much does your credit card issuer know about you?

Cash is slowly but steadily becoming one of the least popular payment methods in the developed countries. Here in the US, the amount of consumer purchases done with plastic cards is approximately ten times higher when compared to cash payments. Consumers are giving up on checks and cash handling and are opting in for the convenience, protection, and rewards often offered by the issuing banks.

Very often credit card companies manage to attract the attention of clients by offering them comprehensive reward points systems, sign-up bonuses, and perks such as early access to concert tickets and invitations for special events organized for clients of a particular network – VISA, MasterCard, American Express, or Discovery. Credit cards enable cardholders to purchase goods and services – the transactions are based on the cardholder’s promise to pay back for the borrowed amounts as well as other additional charges such as interest and monthly services fees.

Credit card issuers are in possession of all sorts of personal information that includes current and previous addresses, income, full name, and DOB. There is no harm there; it’s normal for businesses to ask for personal information so they can verify your identity and determine your trustworthiness. However, personal information is not the only valuable thing that credit card holders are giving away when they start a relationship with a credit card company.

While issuing banks are known to profit out of fees associated with the usage of credit cards; consumers are giving up vast amounts of personal information that might be used by the credit card companies and may end up shared with third parties. Such information includes your spending habits, shopping patterns, preferences, life secrets, and in some cases, even your location.

What information do you give to credit card issuers and how do credit card companies keep track of your buying habits?

Location

If you are using mobile banking the chances that your credit card issuer is aware of your location at all times is high. The information collected could be used for both marketing and security purposes. If you tend to spend a lot of money on dining, you might be offered a new credit card that gives you even more rewards for money spend on a night out. Sharing your location with your credit card issuer helps banks battle fraud too – your credit card issuer would not be concerned if they see an international transaction if you tend to travel a lot.

Spending habits and patterns

Credit card issuers can learn a lot about you from your spending habits and patterns. If you end up spending a lot of money on international trips they might use the information to suggest travel cards with no foreign transaction fees. Or guide you to an affiliated travel website so you can spend more using the same card. Yearly, monthly, and weekly patterns show banks what your day looks like and gives them an idea of what products and services you may need.

Trustworthiness

Bank issuers use your transaction history to decide on whether you are trustworthy and reliable. You may qualify for a credit card limit increase if your income and debt ratios are on an acceptable rate, all your payments are on time, and you pay a regular monthly fee to a luxury car maker. Banks love people who pay their bills on time! It won’t be a surprise if you get offered better credit card conditions if your credit score keeps growing over the years. Banks may even disregard lousy credit if you are a long term client and they see a pattern that they like – you are considered a valued customer as long as you use their card and pay your bills on time.

How do they use the data?

At the age of big data, your card transaction history tells a lot about yourself and how you live your life. So it is not a surprise that many organizations would want access to such data. Life insurance companies might give more favorable quotes to people who go to the gym four times a week, do not spend money on tobacco nor liqueur and buy organic. So you can imagine that apart of providing you with better solutions that suit your lifestyle, card issuers often partner up with data mining companies whose goal is to make you spend more money.

Banks also share transactional data with third parties such as data brokers, that work with advertisers and marketers, who are always ready to target you with what they believe are relevant marketing campaigns of goods and services that you may be willing to purchase. If you do not want your data analyzed, you can opt out you VISA cards here, and MasterCard cards here. The opt requests last only five years so if you want to maintain your opt-out choice, you have to manually enter the card details of every new or replacement card you receive.

Is this enough to be secure and to prevent your data from being spread around?

Not really, the best way to know what data you are sharing with your credit card issuer is to read the Terms & Conditions agreement they give you on sign up. Having antivirus software installed on all your connected devices also helps – being protected will prevent cybercriminals the ability to obtain the missing piece about you from the constant data leaks that have been happening over the last decade.