Posted on 02/12/2009 9:09:13 AM PST by marshmallow
One of the biggest causes of the financial crisis was that Americans were borrowing (and spending) more money than they could afford to pay back.
So how are credit-card issuers reacting to consumers' attempts to live a more financially responsible lifestyle? They're threatening to cut their credit cards off if they don't spend enough.
Loretta Maxwell of Troy, Mich., thought her credit score of 790 buffered her against most of the fallout of the credit crunch. When Chase (JPM) closed her $6,000-limit card in December without warning after two years of inactivity, she called to fight it. She was unsuccessful. "If you're not using it, they entice you to do so, and then the moment you don't spend enough, they cut your limit," she says. (Chase says it is standard practice is to review inactive accounts. "Inactive cards with large open credit lines present a real risk of fraudulent use and large potential liabilities for Chase," says spokeswoman Stephanie Jacobson.)
Maxwell's experience is far from an isolated incident. Most major issuers, including Chase, Bank of America (BAC), American Express (AXP) and Citibank (C) have been slashing credit lines and closing the accounts of those who don't spend on their card regularly. While these issuers are required to notify you in writing of an account closing, there's no requirement that they do so in advance. Even when they do give early notice, the only way a cardholder can stop their account from getting shut down is to start spending again.
In December, Discover (DFS) reported that it closed three million accounts during 2008 due to inactivity, and plans to cull up to two million more. A Discover spokeswoman says the issuer is constantly reevaluating cardholder's credit and assessing whether they have the most appropriate credit line and product.
(Excerpt) Read more at finance.yahoo.com ...
They call us "deadbeats" because they never make any money out of us. We pay off our balance each month.
Maybe we'll be next for the axe.
Odd, I haven’t used my Discover card in 5 years and they keep calling me to get me to use it. I wonder if they closed me.
And then there are people like me who don't buy into the whole "gotta have credit cards" thing.
I called and told them to go ahead and cancel it. I'm not about to let a CC company increase my interest like that for an account in good standing.
I got a call from one of them last fall saying I hadn’t used their card in a while, and the account was in danger of being closed. I told them not to waste any time then, please note the card was closed at customer request, and I hung up.
It’s very common for card issuers to cancel a card after two years of inactivity. It’s nothing new.
Same with us, though we put essentially all expenses including any bills we can through various rewards cards. So not only do they not make any money from us (we pay off all balances every month) but we get money back.
Still don’t cry for them, the merchants pay the credit card companies quite a bit on our behalf.
What we are doing now is taking a bucket, dipping it over the side, and then emptying the bucket into the rowboat.
I hear ya. I could happily live without them.
However, for some things like making a hotel reservation, a credit card has become essential.
It's the game corporations play to force people to get credit cards.
Why anybody has credit cards with the big money center banks is beyond me. They offer nothing but headaches.
Join your local credit union and get a Visa card with people you can trust and talk to. If you are a vet..try USAA also. These big banks are too busy keeping congress happy to care about “good” customers.
The service we get from our Credit Union is equal to what a mutli millionaire would get from a High Net Worth Division of the money center banks.
I use my debit card for ordinary purchasing...but you have to keep track of what you spend.
I've gone back to my old ways...Write one check at the super market each week...using the excess for other things.
No excess?? No buy!!
You can open a USAA checking account online and do everything electronically. They also rebate ATM user fees.
There’s three kinds of people: the haves, the have nots, and the haves but haven’t paid for it yet.
Try buying a plane ticket without one. Or, rent a car. They have their uses.
My wife and I pay off our cards every month. The main one we use is an "NRA" Visa card which pays a reward to the NRA every time we use it.
I attempted one time to determine what the amount was, but neither the credit card company nor the NRA was willing to say. My guess is that the reward rate is negotiated periodically and neither party wants to make these negotiations visible for others who want similar treatment.
But my best guess is that the NRA is probably paid one percent of my purchases (based on other reward cards that we have). Since we average probably $15k on this card, that would provide NRA with $150 from us alone. That's a lot of support for NRA.
capital one canceled me due to lack of use..no warning just got a letter in the mail saying it was closed....chase sent letter raising rates 5% if i didn’t like it i could close it....they call all the shots....the downside is that by them or you closing the acct it reflects negative on your credit rating so no matter what you are screwed again....
I’ve found hotels will take a bank/debit card to hold a reservation, but car rental companies won’t. They require a regular credit card.
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