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Sitting on an airplane you find out the person next two you paid twice as much for their seat and the person behind paid 20% less than you. This variable pricing for the same service is nothing new in the airline industry or the travel industry as whole for that matter. However this variable pricing called price optimization by financial analysts may be coming to a bank near you.
Banks have lost a lot of money recently and they are looking for ways to make more money. One new way is variable pricing for loans. It used to be that a good credit score paired with a good debt ratio and job history meant X% rate. The rate was the same for everyone with the same favorable characteristics. Now that is no longer the case. Banks are looking into price optimization scenarios on loans and other financial rates. So you can pay more than someone with a similar financial history.
Just like airlines getting more from business travelers than leisure travelers, banks are looking into ways to figure out which customer is willing to pay more for the same loan. If you already have a relationship with the bank, they might even use that against you. Smart Money magazine has a good article on this new pricing at banks and it is definitely worth a read. According to the article “Some banks are coming up with different rates for as many as 20,000 customer segments — defined by variables like location, loan type, transaction history and banking habits. Prefer to apply at your local branch? A computer may decide you’ll typically accept higher rates than those who apply online or by phone.”
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