Definition
A deadbeat is a cardholder that manages his or her account so responsibly that the credit card issuer loses money on the account.
Analysis
Deadbeat is used in a derogatory manner in most contexts, such as a parent who refuses to pay child support. However, card issuers have used the term frequently to describe a cardholder who maximizes their card benefits without contributing materially to the card issuer’s profits.
Card issuers have certain expenses related to each credit card account. They must physically mail a statement for each biling cycle in which activity occurred, unless the cardholder has signed up for online statements. Simply issuing the card and any replacements cost the cardholder nearly $20 each occurrence.
Card issuers also have to pay for any rewards that are offered through the card. These can include travel insurance premiums, cash rebates, gift cards or even frequent flyer miles.
Card issuers do receive a small transaction fee each time the card is used. However, if the client never carries a balance or incurs any nuissance charges, then the costs often exceed the revenues for the issuer.
