In business, when it comes to dirtying the brand, usually the effect is seen when competition has a better product, lawsuits cast doubt on the brand, or other factors far beyond the corporate boardroom. When it comes to HSBC credit cards, it is HSBC that is dirtying the brand. Does London know what is going on in the United States?
When it became clear that a “Creditcard Bill of Rights” would become law in the United States, HSBC started reducing credit limits on credit cards. The effect on one’s credit report is obvious. Credit scores decreased as the ratio of available credit to credit used became skewed.
Not subprime customers
Many complaints clearly state that these are not subprime borrowers. Credit scores from 700 to 800 have been effected. None of the people effected have anything good to say about HSBC.
The first complaints received were about the GM Card, which is an HSBC brand. We also received complaints about HSBC’s Mastercard, and Direct Merchants cards.
In some cases credit limits were reduced while unsuspecting customers were denied credit, charges were declined, or overlimit fees resulted. Business customers were stranded, while others were embarrassed at or nearer to home.
Long term effects
HSBC recently shut down HFC and Beneficial offices, and exited auto financing. While these areas may have served the subprime market, HSBC credit cards are not entirely subprime. HSBC also supports private label merchant credit cards such as the Best Buy card.
If HSBC’s credit card business it to remain viable, why would HSBC dirty the brand? Perhaps HSBC intends to run off all customers with good credit. Subprime customers make more money for HSBC, and cardholders are less able to defend themselves.
Prime customers insulted by HSBC will not finance homes through HSBC USA, and HSBC’s banking operations not related to Household International. Insulted customers will not patronize HSBC brokerage accounts, nor will they invest through HSBC.
Was the decision to dirty the HSBC brand a decision made in London? In New York? or by HSBC Finance? It’s been a while since we filed anything under the ‘Tom Detelich’ category, so perhaps Tom can answer this puzzling question.
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