The Million Dollar Email: Refinancing Credit Card Debt

Author Nickels
Read time 3 minutes read time

As previously reported, Nickels partnered with five financial institutions to help them identify which of their consumers were likely revolving on third-party credit card debt.  We did this by analyzing the financial institutions’ checking account data. 

The analysis first showed:

  • 60% of the checking accounts were making identifiable payments to third-party card providers.
  • Those payments were equal to an astounding 29% of all payments debited from their accounts in a year.

We then analyzed the payment patterns from each checking account to each card provider and found that thousands of these financial institutions’ consumers were showing strong signs of revolving on their third-party credit card debt.  In fact, we identified 24%, on average, of a financial institutions’ checking accounts as likely revolving on third-party card debt. This was costing the card holders millions of dollars in interest and fees each year and leaving the financial institutions with poorer consumers with worse credit scores and fewer lending opportunities.

Marketing to Likely Revolvers

Identifying these consumers within a financial institutions’ consumer base is just one part of the equation. After sharing the list of likely revolvers back with each financial institution, along with the names of the card providers they were likely revolving with, Nickels helped create collaborative marketing strategies focused on delivering targeted refinance loan offers to the likely revolvers for three of the participating financial institutions. 

The goal of the targeted marketing outreach was to enable the financial institutions to grow their own personal loan and card balance portfolios while immediately lowering their consumers’ monthly interest costs and shortening their payback periods on their credit card debt. The initial level of effort for the financial institutions was light and they sent as little as one email communication to the likely revolvers. Despite the light touch, they saw an immediate return on their efforts through new personal loan and card balance transfers. 

Our Results

Each financial institution generated over $1M in refinanced third-party card debt, mainly through new personal loans and card balance transfers.

Refinance success across the three financial institutions (FI)

The targeted outreach proved to generate a lift above-and-beyond the financial institutions’ normal business.  When comparing the refinance rates of the likely revolver target population to those where third-party card payments were identified but the consumers’ did not meet Nickels’ revolving threshold, each financial institution saw that the likely revolvers refinanced at a much higher rate.

Signature loan refinance rates for each participating financial institution (FI)

In addition, the average loan size of the loans the likely revolvers took out was in-line, or often larger, than the loans being taken by the comparative baseline population that had not met our threshold of revolving.

Signature loan amounts for three participating financial institutions (FI)

A Winning Formula

What does this mean for financial institutions? Checking account analysis is working. We can accurately identify which consumers have the highest propensity to refinance revolving third-party credit card debt. 

Combined with targeted communications to these consumers, financial institutions can grow their own loan portfolios and card programs. Additionally, financial institutions can help their consumers improve their financial wellbeing by lowering the cost of their credit card debt. Bonus, no cluttering of inboxes in the process.