Some of you know I play poker for fun, and that I used to play quite seriously in my early 20s.

After 1000s of hours at the poker table, I'm well-attuned to how people react to adversity and loss in games with high risk and uncertainty.

Over the last two years, working with 12 different consumer lenders at my marketing agency New Market Growth, I was reminded of a player profile I LOVE to play against.

Scared money.

In poker circles, once you tell a buddy that so-and-so is "scared money", they know exactly how to adjust. These players are among the most predictable and profitable opponents.

The Psychology Of Scared Money

People can become scared money for several reasons, but the most common is recent losses.

Picture Bob, who's hit a brutal run of cards. His pocket aces lose to pocket kings. When the flush completes, his opponent always has it. When he raises pocket nines, he gets called in 3 places and the flop comes down AKQ.

Anyone who's played poker semi-seriously knows these runs can last weeks or months.

What Bob SHOULD do is continue to get his money in as a favorite and keep his opponents on defense through aggressive, well-calculated play.

But what Bob actually does - like 95% of players in his situation - is completely pivot his strategy.

He's no longer at the table to win. He's at the table to not lose.

The pain of losing has become too severe, and his emotions are clouding his judgment.

The Doom Loop

Bob used to look for situations where he had a mathematical edge. Now he's looking for near-guarantees before he wagers.

He folds pocket jacks to pressure. When the flush comes in, he always folds. When he raises kings and an Ace flops, he assumes his opponent has it 100% of the time.

His opponents notice. They start bluffing him more. When Bob finally bets with a good hand, everyone folds because his betting frequency is so low.

Bob's emotional desire to REDUCE risk had a perverse effect - it actually INCREASED his risk.

He went from being a mathematical favorite (who was getting unlucky in the short-term) to a player who's easily exploitable. He doesn't have big losses anymore, but he rarely wins either. The blinds and antes slowly erode his stack.

He feels safer - no big losses with marginal hands - but in reality he’s locking in a slow but steady loss in the game.

The Scared Money Problem In Lending

Some lenders experience higher than expected losses from accounts booked through the affiliate channel.

The classic response?

Increase APRs and add friction to application flows to gather more information from applicants. Tighten policy and reduce the approval rate.

At a glance, this seems reasonable. Lenders have margins to protect.

But remember the context: affiliate channels are probably the most competitive channel. Your offer sits side by side with dozens of competitors.

That APR increase? It just made your offer less compelling. Fewer people click now, and the ones who do are riskier and adversely selected.

Those extra questions? More people abandon the form (your competitors aren't asking for those details), and the ones who stay are riskier with fewer alternatives.

But it gets worse.

Publishers will likely lower your ad position in their marketplace. That’s because the higher APR reduced your click-through rate, and the extra friction reduced your application and approval rates.

Now we have three sources of lower volume and adverse selection.

The next time your risk team reviews performance, losses and DQs will likely come in higher than expectations again because they didn't price in these compounding 2nd order effects.

So they raise APRs again and add more criteria to the underwriting process.

And the doom loop spins on.

Offense Is The Only Option

If there's one thing I've repeated to clients throughout 2025, it's this: if you're going to compete for traffic in affiliate channels, you need to be on offense.

Scared money can't win in affiliate channels, just like Bob can't win at poker by trying to flop full houses every hand.

The competitive dynamic in affiliate channels is ruthless. Without a competitive product, price, and application funnel, the deck is stacked against you. Consumers gravitate to brands "on offense."

How To Reset Your Strategy

Pivoting from defense to offense isn't easy, but it's imperative to booking high-quality accounts in affiliate channels.

The good news? You don't have to turn it all around overnight.

Here's how to start:

Run a small test. Launch a limited test with a new product, price point, or application experience. Keep the volume small so you can learn without risking your entire book. You’re looking for signals that demonstrate the more competitive (“on offense”) product and experience produce positive select, driving lower than expected losses.

Partner with your affiliates. Ask them to cap your volume while you refine your processes. Good partners understand that your long-term success is their success.

Benchmark your competitors. Pull 5-10 competitor offers from major comparison sites. Document their APRs, application steps, and approval messaging. Identify where you're adding friction (that they're not).

Calculate the real cost of defense. Run the numbers on what "playing it safe" is actually costing you in volume and customer quality. Often, the "risky" path is actually less risky than slowly bleeding out.

Take a strategic pause if needed. If organizational emotions are running high, it's okay to sit out the channel temporarily. Come back when you can approach the strategy objectively. This can be better than running a high priced, high friction offer that could be a magnet for the riskiest customers out there.

The key is making a deliberate choice rather than letting fear drive the bus.

In both poker and affiliate marketing, there are second-order consequences to pivoting from offense to defense. The scared money approach feels safer in the moment, but it's the surest path to getting ground down over time, and is usually misaligned with long-term goals.

The players who win (in the long run) are the ones who stay aggressive, stay calculated, and trust their edge even when the cards aren't falling their way.

If you’d like to chat with external experts who have seen this pattern before and have helped brands turn it around contact me at [email protected].

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About Us

Welcome to The Free Toaster! The newsletter for marketing pros at fintechs, banks, and lenders.

Inspired by the free toasters banks used to give to each new customer, we’re here to help you acquire more customers at scale. We deliver fresh news, data, and insights to help you acquire more customers, minus the breadcrumbs.

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Carlos Caro is the founder of NMG, an agency that helps lenders build affiliate programs.

Nick Madrid is the co-founder of Uncovered Media and a co-founder of Ghostmode (a media company that builds Newsletters, Podcasts, and communities in high-value B2B niches).