Imagine credit card companies stealing each other's customers over smartphone. It's not so farfetched.
On Thursday, Mitek Systems unveiled a new app that allows you to search for a better credit card rate than the one you already have and instantly transfer the balance to a new credit card account. All via your iPhone, BlackBerry and Android.
Here's how it works.
Suppose you bank with ABC Bank while also carrying a credit card from XYZ issuer. ABC Bank wants your credit card business, but all the offers it sends you in the mail ends up in the recycling bin. So, ABC embeds the Mitek Mobile Balance Transfer app onto its mobile-banking system. The next time you visit ABC on your iPhone, there's a new app icon that says something enticing like, "Get a better rate now!" or "Zero percent balance transfer."
You take the bait. You click on the icon and the app asks you to take a picture of your credit card statement from your other issuers. You snap. It sends it to ABC, which calculates the interest rate you're paying using information from the bill such as the balance, account number, name of the issuer and minimum payment.
And in a blink of an eye, it sends you a competing offer. Maybe the offer is for a permanently lower interest rate. Maybe you could get an introductory rate of zero percent for the first 12 months. If you like what you see, then you press yes and a new credit card account will open automatically. The balance from your old card will jump onto the new one.
"It's just a quicker, more efficient way of doing things," says Drew Hyatt, senior vice president of sales and business development at Mitek. "By taking a picture, consumers don't have to fill in anything. No application."
Hyatt said this is possible because you already have a relationship with ABC Bank and they have enough information on you. If banks try to get new customers through a marketing campaign using the app, you may have to fill out a credit application and the issuer will pull your credit report and/or score. But not always.
"Right now, the large credit card issuers have databases with good data on the vast majority of the U.S.," Hyatt says. (Never mind that it sounds scary.)
And by the way, it's not just banks who might offer this app. Mitek is also trying to get sites that aggregate credit card offers to sign up for the app.
While the app may make financial finagling of your credit cards easier, make sure it isn't too easy. Research the terms of the new offer, including any balance transfer fee, before signing up.
Check out Bankrate's balance transfer calculator to help determine if that strategy is right for you.
What do you think of the trend of moving personal banking to your smartphone?
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