Posted on 07/08/2009 3:13:08 PM PDT by JoeProBono
With credit card defaults rising, some companies are looking for reasons to cut your plastic. To make these decisions, banks rely on data about what you buy, where, and the company you keep. Stacey Vanek-Smith reports.
Not all that long ago credit-card companies were looking for reasons to give us credit. As we all know now, it didn't take much to get a shiny new piece of plastic in your wallet. But with credit-card defaults rising, those companies have started looking for reasons to take some of that credit away. To help them figure out how, banks are compiling thousands of bits of data, like what you buy, where you buy it, sometimes even the company you keep. As Marketplace's Stacey Vanek-Smith tell us, your credit card is watching you.
So, two guys walk into a bar, have a few drinks and split the bill on their credit cards. One guy's unemployed and in serious debt. The other has a job and pays all his bills on time. The joke is actually on both of them. Those drinks may have just cost them their credit....
I’m about to dump my bail-out sponsored CC provider. This cuts two ways.
Donating money to Free Republic?! ZOMG, you must be one of those eeeeevil right-wing “extremists”! /sarc
I’m keeping a list, and checking it twice of all those credit card companies that are naughty and nice. I can’t wait until they are begging for our business again. Those companies that have cut my (up to now perfect) credit limits and have tried raising my rates are getting their mailers back with a BIG F.U. written all over it.
I've listened to their BS radio program. It's consists of one third someone reading the days market numbers into a microphone, one third some story about how business is corrupt, and the remainder devoted to a continuing discussion of effective strategies for charitable giving, which so often includes a tax-deductable gift to your local public radio station.
Bank of America just cut our credit card limit in half from 25 grand - we never carry a balance, plan on canceling it and are switching to a local bank from BOA.
Where would these mega-banks be if they did not leach off the tax-payers in the form of bailouts to keep them from bankruptcy?
I use the prepaid kind you get at Walmart. Usually in someone else’s name. I don’t trust credit card companies or the credit bureaus. Really cuts down on telemarketers too.
parsy, who suggests you order delivery pizza in phony names
Yet another reason to return to transacting business in hard currency (real money, not Federal Reserve brand toilet paper or its electronic equivalents). Americans need to boot all third parties the Hell out of our financial affairs, government being the worst offender of all.
My credit card company is my bank.
They only need to look in my checking account to see that I have twice my total credit lines on hand in cash.
Of course, I never charge much, pay everything in cash.
Those toppings are gonna cost you yer credit card, buckaroo.
Rubbish. If each person pays for their half of the bill, there are two credit card transactions, neither of which is "aware" of the other. It would be a if anyone dining in the restaurant at the same time as you is information the credit card company would know. It isn't.
A lot of people are getting their credit limits slashed — even if they’ve been exemplary customers until now.
The rate at which credit card defaults are rising is scaring the crap out of the credit card industry. They’re taking any method they can to reduce their exposure - canceling cards you have not used in a long time, slashing your spending limit, shortening the billing cycle, increasing late fees, you name it.
Here’s a little insider baseball from the credit industry (including mortgages): They have computer models of how high they can expect defaults to go as unemployment rises. They seek to contain their default risk through hedging and laying off the problem in the secondary market through credit instruments. But there’s a problem: Most banking credit-quality models don’t plan for unemployment (U-3, ie, main headline numbers) higher than 9.5%. Above 10% unemployment and they’re into an area where they have very little data to support their models - we’ve had only one quarter of unemployment over 10% since WWII.
Here, we’re probably looking at 10%+ unemployment for at least two quarters, perhaps more, and “elevated” unemployment for several quarters more.
So the credit card companies, banks, etc — they’re all scrambling to find some way to reduce their risk exposure.
If you are trying to find someone,a pizza delivery number is a way to do it.
parsy, who has had to hire process servers once or twice in his life.
Haven’t owned a CC since ‘85. Ain’t lost nothing.
I have 5 credit cards, pay in full each month. Always.
They are all rewards cards. My best one recently cut my limit from $25K down to $5K because I was “using it less.” I was using it less because I had maxed out on the rewards I could earn for the year.
I asked for an increase in the credit limit, so it wouldn’t look bad on my credit report.
They reluctantly raised it a measly $500, up to a whopping $5500 a year!
Meanwhile, my 4 other cards are (so far) happy to extend me $25K/yr credit. I wonder what they see in me that the other one doesn’t.
Not to mention Garrison Keillor.
I use two cards, charge everything, and pay off the bills at the end of every month. I get several S-West Airlines RT tickets a year as a result of the Visa. And I get rebates both directly from AmExpress and from Costco where I mainly use the AmEx card, which on the back side also doubles as my Costco membership card, so I carry one less card.
If either of these card companies cancel me (which I consider very unlikely), I’m indifferent. They will lose a lot of fees they get from the merchants, and I’ll just take my business elsewhere. If no one else will give me a card (highly unlikely), I would also be indifferent, and just start paying cash, since I pay in full at the end of the month anyway.
I don’t use cash because I find a credit card fast and convenient, and I don’t have coins jingling around in my pocket, plus I pay all my various monthly bills online with a credit card, even including car insurance, registration, home insurance (I have no mortgage), etc. If they find my spending habits fascinating, I don’t really give a hoot, since I don’t care if they cancel me or not.
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