• The New Yorker, Wednesday, March 11, 2009 11 AM

James Surowiecki has a perspicacious analysis of credit card companies such as American Express trying to get rid of customers -- "a pretty startling change of direction for the lords of plastic." There were more than 1.5 billion credit cards in circulation in 2006, he reports, and credit card borrowing rose 30% between 2000 and 2006 even as American's real income essentially stayed the same.

Surowiecki says that the credit card companies are following the advice given by Larry Selden and Geoffrey Colvin in Angel Customers & Demon Customers. Not all customers are equal, they claim. "Some are tremendously profitable, while others, like the guy who calls customer service six times a day to check his account balance, cost more than they're worth." The latter need to be ... shall we say "disengaged."

Trouble is that there's a fine line between good and bad credit-card customers. The best customers charge a lot and pay only a little every month, racking up interest charges and late fees. But they're also the ones most likely to default. "Smaller credit lines and less borrowing make sense," Surowiecki concludes. "But in the short run they're going to throw a lot of sand into the economy's gears."

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