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The Saturn Card?

posted by Adam Levitin

Saturn's shtick in the car market is familiar enough: different kind of car, different kind of car company. Saturn tries to distinguish itself by being the what-you-see-is-what-you-get, we-don't-haggle, not-pulling-any-fast-ones, reliable car company. And there is definitely a market niche for that. So why haven't we seen it in the credit card industry? Why isn't there a Saturn card--a card with simple, straightforward pricing, no abusive billing practices, and excellent customer service?

Arguably, some of the high-end T&E cards fit this role, but Saturn isn't a high-end car. Is it just impossible to do profitably, or is it so much less profitable than current practices? Or is everyone just scared to try? I would think that there'd be a large market for a Saturn card--parents sending their kids off to college, for example. Maybe the rates would be higher, but the trade-off of higher upfront rates for no tricks and better service is one that some people would surely take. Comments welcome.


Saturn saves money with this strategy- no salesman to pay, so in a way, its margins are improved through the strategy in a way that can make up for what they lose.

Confusing terms and fees probably cost consumers alot more than they cost the credit companies... so to make up for the lost revenue from the terms/fees changing I assume they would need to raise interest rates or annual fees in order to share Saturn's savings.

Would parents be willing to pay annual fees on simple credit cards? That I do not know.

Even if a card really were "what-you-see-is-what-you-get", why would anyone believe that to be the case?

Citi had a Citi Simplicity Card which charged no late fees but I don't see it offered any more.


AmEx Clear is still available -- "absolutely no fees of any kind."


My Navy Federal Credit Union card comes pretty close, e.g., no cash advance or balance transfer fees. I don't know their practice re: universal default, although they do advertise "fixed rates." Late fees don't bother me, isn't a lender entitled to encourage/demand timely payment?

I've been working for the past 10 years as a compliance officer with credit card issuers, including Capital One and HSBC.

Capital One had (may still have?) a flat-fee credit product where the customer is charged a flat fee based on the closing dollar balance listed on the statement.

The economics of the card (i.e. did we make money) were very challenging to figure out (I'm not an economics guy, so I don't know how it was done). Other fees (late, overlimit, etc.) did apply.

However, there were also challenges from a regulatory standpoint - because Reg Z requires certain type of disclosures in certain ways, there was always a high risk that we would be considered technically non-compliant with the regulation, which potentially carried class-action liability risks.

However, my sense is that the product is viable and if priced reasonably would command a great deal of attention in the marketplace - if one could get past the potential regulatory and legal hurdles.

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