When Being a “Bad” Customer is Good for Your Budget

It might be easier if employees just rolled their eyes when you walked into the store, as if to say, “Oh no, not you again!”

But you don’t have to be demanding or difficult in order to be tagged as a “bad” customer in the 21st century.

Today, computer algorithms make that determination — and you might be surprised at how companies decide which customers they like.

When I researched my last book, Scammed: How to Save Your Money and Find Better Service in a World of Schemes, Swindles and Shady Deals, my sources danced around the question of who’s a good customer, and who isn’t.

But in the months since the book was published, I’ve come across some information that you’ll find surprising.

Surprising, in that you may be a bad customer without even knowing it. For example, you might be a bad customer if:

You pay off your credit card debts.

One of the best-known examples is how credit card companies determine who is — and isn’t — a good customer.

You would think paying off your credit cards makes you a better customer. But no.

Since credit cards make their money from interest, they want you to run up lots of debt and never pay off your balance, getting yourself deeper and deeper into debt.

A bank insider sheepishly admitted that I was a deadbeat recently.

Being tagged as a bad customer can affect everything from the offers you get from a bank to the order in which your call to the bank is answered.

You refuse to join a loyalty program.

Frequent-customer programs were never about a company’s loyalty to you — they were about your loyalty to the company.

If you can see through the bait-and-switch that many rewards programs have become, I have some bad news: Companies are on to you, and they don’t like you.

If you belong to a loyalty program, they can track your purchases, send you targeted offers and often even short-circuit your common sense, enticing you to buy a product that’s more expensive and inferior.

An airline insider tipped me off about this one. Its algorithm, he says, evaluates each flight based on its number of frequent fliers, and gives the ones with the most elite-level travelers priority.

You don’t do coupons or memberships.

A well-known West Coast grocery chain marks up its prices and then offers a 15 percent “discount” to its members. That brings the prices in line with its competition. Pretty clever.

The memberships are free, but there’s a tradeoff: They know who you are and what you bought. You don’t have to be a privacy advocate to refuse to participate in this scheme, but you will pay for it — literally.

The implication is clear: Membership has its privileges, and non-membership is a punishable offense. Get a membership card, otherwise you’re a bad customer. I’d rather take my business elsewhere.

You pay off your mortgage early.

Just like credit cards, banks want you to hold your mortgage for a full 30 years. Of course they do. Pay it off early, and you’re cutting into their profits.

A mortgage can double the cost of the home over 30 years — which is to say, if you paid $200,000 for a house, you will have shelled out more than $400,000 over the course of three decades, once you factor in the interest.

No wonder lenders insert clauses that punish homeowners for paying off their mortgage early (these usually affect lenders in the first five years of home ownership). Simply put, your “good” behavior is bad for business.

The bottom line

As you begin planning your finances for 2013, my advice is: be a bad customer.

Pay off your debts, don’t participate in loyalty programs that can short-circuit your common sense, and stay away from stores that play bait-and-switch games with pricing.

I’m not giving you this advice lightly. The only loyalty program in which I actively participate is Starbucks, and a guy needs his caffeine.

I paid off my mortgage a decade ago. Best decision, ever. I settle my credit card debts in full every month, no matter what happens.

Yes, businesses hate me, but my budget loves me. And when I log on to my computer to run my numbers at the end of every month, that’s really all that matters.

Christopher Elliott is a consumer advocate who blogs about getting better customer service at On Your Side. Connect with him on Twitter and Facebook or send him your questions by email.