Bait And Switch

AAA

DEFINITION of 'Bait And Switch'

A dishonest marketing tactic in which a marketer advertises a very attractive price/rate/term that is really a teaser rate meant to attract customers. Once the customer comes into the store/office to inquire about the advertised price/rate (the "bait"), the advertiser will attempt to sell the customer a more expensive product (the "switch").

INVESTOPEDIA EXPLAINS 'Bait And Switch'

The bait and switch tactic has gained notoriety in the mortgage market as an unscrupulous marketing tactic meant to drive business. In a mortgage bait and switch an agent or company will post exceedingly low mortgage rates, knowing full well that the vast majority of applicants will be unable to qualify for these teaser rates. Once customers begin to come into the office to inquire about the low rate, the agent will proceed to offer them the higher rates they are more likely to qualify for, thus earning greater commission.

RELATED TERMS
  1. Adjustable-Rate Mortgage - ARM

    A type of mortgage in which the interest rate paid on the outstanding ...
  2. House Poor

    A situation that describes a person who spends a large proportion ...
  3. Teaser Rate

    An initial rate on an adjustable-rate mortgage (ARM). This rate ...
  4. Initial Interest Rate

    The interest rate that is initially assessed on an adjustable-rate ...
  5. Total Annual Loan Cost (TALC)

    The projected total cost that a reverse mortgage holder should ...
  6. Big Data

    The growth in the volume of structured and unstructured data, ...
Related Articles
  1. Credit & Loans

    4 Steps To Attaining A Mortgage

  2. Home & Auto

    Top Tips For First-Time Home Buyers

  3. Credit & Loans

    Mortgages: Fixed-Rate Versus Adjustable-Rate

  4. Home & Auto

    To Rent Or Buy? The Financial Issues

Hot Definitions
  1. Capitulation

    When investors give up any previous gains in stock price by selling equities in an effort to get out of the market and into ...
  2. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  3. Conduit Issuer

    An organization, usually a government agency, that issues municipal securities to raise capital for revenue-generating projects ...
  4. Financing Entity

    The party in a financing arrangement that provides money, property, or another asset to an intermediate entity or financed ...
  5. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  6. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
Trading Center