Behavior-Based Repricing

Charging people higher prices if they don't act right, especially by missing credit card payments.

Fred just graduated High School and received a mailing offering him a new credit card with an introductory APR of 0.0%. Having not studied economics in school, Fred pounced on this offer and then bought himself a Bluetooth margarita blender, multi-colored strobe lights, and a jacuzzi.

After the introductory period (and house parties) ended, Fred's APR reset to 15.99% and his minimum payment due was more than $1,500. Fred couldn't afford this and, after missing his first payment, the card company employed behavior-based repricing to increase his APR to 24.99%, which he also could not pay. This cycle did not end well for Fred.