American Express AA Due to Transaction Type

[UncleB]

So, it appears that I'm good if I want to go to the state store for some Booker's, but if I want to make a political donation I had better use another card. 

Oh, if I go to the casino, I had better either use a different card at the gas station as well... or wait until I'm further away before using my Amex.

[Anonymous]

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@Anonymous wrote:

I'm actually moving to a different state next month. Having worked in credit, I seldom see the type of high credit lines from where we are moving to, like folks around here have. Seriously, I've seen lots and lots of 5 digit credit lines here, but mostly low 4 digit lines out of there, if not in the hundreds. It's northern California, btw. I wonder if I should be concerned?

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So, you're moving to norcal? Is it Stockton or Modesto? If so, run the other way! 

[UncleB]

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@onstar wrote:

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@UncleB wrote:

Also, as far as I know they still take into account your billing ZIP code as one factor to determine your credit worthiness even now, which some might argue is an acceptable practice.  I haven't made up my mind yet.

What made the old practice so despicable is that it literally penalized folks for shopping in less affluent areas of town, regardless of their own means... again, supposedly they stopped the practice, but it's a shame they ever started it.

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Yeah, I have no problem with ZIP and where you shop and whatever. Keeping in mind that each of these factors are all just one factor among dozens to determine credit worthiness. The actuaries will use every bit of data if they see correlation.

Auto insurance works similarly. They bucket by ZIP (home & work), distance from work to home, sex, age, years licensed, driving record, number of at fault accidents (sometimes number of accidents regardless of fault), college graduate or not, what major in college, marital status, credit score (in some states), etc. Point being, actuaries will use just about everything to see if there is any pattern. With actuarial work, pretty much everything is legal as long as data can support it. For example, they can absolutely discriminate based on gender. In some ZIP, men have higher insurance rates than women; in some other ZIP, women have higher insurance rates than men. And they can discriminate based on age. Rates typically drop until you get to a certain age, then it can go up. I don't see why credit cards should work differently.

It's not like they're pulling a "Kardashian Kard" and exploiting people. The actuaries at Amex (and whatever other banks that do this) are merely doing their due diligence and giving proper credit based on data.

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You're right, and sometimes even with Auto insurance they come up with absurd results due to their bucketing.  For example, it was in the news just a week or two ago how some insurance companies raise car insurance rates (sometimes drastically) on widows... since they're not married anymore. 

I know big data has it's place, but sometime's it's just senseless.

[Anonymous]

Oh I read that article too, how they were overcharging widows and divorced people or something. I gotta remember to put as single on my car insurance shopping. 😨

[Anonymous]

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@Anonymous wrote:

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@Anonymous wrote:

I'm actually moving to a different state next month. Having worked in credit, I seldom see the type of high credit lines from where we are moving to, like folks around here have. Seriously, I've seen lots and lots of 5 digit credit lines here, but mostly low 4 digit lines out of there, if not in the hundreds. It's northern California, btw. I wonder if I should be concerned?

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So, you're moving to norcal? Is it Stockton or Modesto? If so, run the other way! 

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Sacramento......is that worse? lol

[Anonymous]

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@Anonymous wrote:

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@Anonymous wrote:

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@Anonymous wrote:

I'm actually moving to a different state next month. Having worked in credit, I seldom see the type of high credit lines from where we are moving to, like folks around here have. Seriously, I've seen lots and lots of 5 digit credit lines here, but mostly low 4 digit lines out of there, if not in the hundreds. It's northern California, btw. I wonder if I should be concerned?

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So, you're moving to norcal? Is it Stockton or Modesto? If so, run the other way! 

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Sacramento......is that worse? lol

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Sacramento isn't too bad actually. My penny pinching cheap ass multi millionaire aunt lives there, and they don't wanna move, so I guess you're good. 😆

[Anonymous]

I don't know how to feel about using ZIP code and store type transactions to measure creditworthiness--many low-to-moderate-income people I know are very responsible, live within their means, and pay responsibly. Running such a fine-toothed comb through someone because the majority of their transactions are from a Walmart or Target, or because they live in a historically low-income area, while totally within their right as a lender, doesn't give me a good feeling.

Again, I understand risk assessment, but that's what things like credit score in general, debt-to-income ratio, and payment history are for: If all those check out well, as well as no unusual behaviour (running up a high balance, low payments) it should be enough to trust a borrower that they live within their means. They can and should, of course, pull out at any time they feel a risk, but that should be when unusual behaviours and transactions are made, not because you're a financially-modest person who shops at Target almost exclusively. It's like how things such as gender, race, etc. were removed from credit reports to balance credit decisions strictly on creditworthiness--knowing what stores one frequents, while giving a lender an idea of what level of purchasing a borrower will make, doesn't say anything about their creditworthiness.

(Thinking like this also helps perpetuates the idea that a person is low-to-moderate income living in a low-to-moderate income area strictly due to financial irresponsibility, which may not be the case at all, and doesn't consider things like opportunities for education. But that's a much bigger topic, and I'm not expecting Amex at all to care about much beyond their risk parameters and revenue, so please don't consider my thinking to suggest they should start caring at any time.)

I don't know. Amex began as a lender that catered to high-income individuals with significant and frequent purchasing, and I personally feel they've never really changed their philosophy. They began to accept people with lower incomes and created revolving cards for more modest purchasing (like groceries), but they are also easily spooked in return. It's like you've taken a fish out of water, in a way--they're out of their element, and therefore gasp for air.

I dunno, this post is all over the place. It's late... I hope I'm understood.

[UncleB]

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@Anonymous wrote:
I don't know how to feel about using ZIP code and store type transactions to measure creditworthiness--many low-to-moderate-income people I know are very responsible, live within their means, and pay responsibly. Running such a fine-toothed comb through someone because the majority of their transactions are from a Walmart or Target, or because they live in a historically low-income area, while totally within their right as a lender, doesn't give me a good feeling.

Again, I understand risk assessment, but that's what things like credit score in general, debt-to-income ratio, and payment history are for: If all those check out well, as well as no unusual behaviour (running up a high balance, low payments) it should be enough to trust a borrower that they live within their means. They can and should, of course, pull out at any time they feel a risk, but that should be when unusual behaviours and transactions are made, not because you're a financially-modest person who shops at Target almost exclusively. It's like how things such as gender, race, etc. were removed from credit reports to balance credit decisions strictly on creditworthiness--knowing what stores one frequents, while giving a lender an idea of what level of purchasing a borrower will make, doesn't say anything about their creditworthiness.

(Thinking like this also helps perpetuates the idea that a person is low-to-moderate income living in a low-to-moderate income area strictly due to financial irresponsibility, which may not be the case at all, and doesn't consider things like opportunities for education. But that's a much bigger topic, and I'm not expecting Amex at all to care about much beyond their risk parameters and revenue, so please don't consider my thinking to suggest they should start caring at any time.)

I don't know. Amex began as a lender that catered to high-income individuals with significant and frequent purchasing, and I personally feel they've never really changed their philosophy. They began to accept people with lower incomes and created revolving cards for more modest purchasing (like groceries), but they are also easily spooked in return. It's like you've taken a fish out of water, in a way--they're out of their element, and therefore gasp for air.

I dunno, this post is all over the place. It's late... I hope I'm understood.

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+1

I agree with everything, with special emphasis on the bold print.  I've said for a while that Amex is really a charge card company masquerading as a credit card company.  Historically, they did cater to higher-income individuals, and I believe the ham-handed way in which they have attempted to expand their offerings to other demographics reflects this.

My take-away from this thread is that it's good to have an Amex (or two), but not to 'depend' on one for critical needs.  Note that I said, "my" - this doesn't apply to everyone, but for my own comfort level, I prefer to deal with lenders who aren't as concerned with the minutia of my day-to-day habits.  This being said, my Amex cards still have a place in my portfolio, namely for the rewards, however if they someday decide that I'm no longer a 'desired customer' it won't be catastrophic.

[onstar]

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@UncleB wrote:

You're right, and sometimes even with Auto insurance they come up with absurd results due to their bucketing.  For example, it was in the news just a week or two ago how some insurance companies raise car insurance rates (sometimes drastically) on widows... since they're not married anymore. 

I know big data has it's place, but sometime's it's just senseless.

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AFAIK, with ALL insurance companies, your rates will go up if your marital status changes from married to anything else. State Farm, Allstate, Farmers, Nationwide, Safeco, Liberty Mutual, Progressive, Geico, USAA, Mercury, etc. They are simply going by their actuarial tables. It sucks to be bucketed like that, but that's how things are done.

In some states (not California), your rates can be determined by your driving habits. For example, Progressive has a plugin device called Snapshot which monitors how you drive. If you never speed and always brake gently, then your rates will be a LOT lower than someone who habitually speeds or brakes hard. California does not allow anything like this because the state has a final say on the insurance companies' rates. In order to raise/lower the insurance rates in California, the company must submit it to the DOI, then it can take like 18 months for the new rates to go in effect. I used to work in insurance and financial planning for several years in California.

Anyway, back to credit cards, I'm sure there is a lot of profiling. But again, these are all small factors. As long as you keep making on time payments, you typically have nothing to fear.

[Anonymous]

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@UncleB wrote:

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@Anonymous wrote:
I don't know how to feel about using ZIP code and store type transactions to measure creditworthiness--many low-to-moderate-income people I know are very responsible, live within their means, and pay responsibly. Running such a fine-toothed comb through someone because the majority of their transactions are from a Walmart or Target, or because they live in a historically low-income area, while totally within their right as a lender, doesn't give me a good feeling.

Again, I understand risk assessment, but that's what things like credit score in general, debt-to-income ratio, and payment history are for: If all those check out well, as well as no unusual behaviour (running up a high balance, low payments) it should be enough to trust a borrower that they live within their means. They can and should, of course, pull out at any time they feel a risk, but that should be when unusual behaviours and transactions are made, not because you're a financially-modest person who shops at Target almost exclusively. It's like how things such as gender, race, etc. were removed from credit reports to balance credit decisions strictly on creditworthiness--knowing what stores one frequents, while giving a lender an idea of what level of purchasing a borrower will make, doesn't say anything about their creditworthiness.

(Thinking like this also helps perpetuates the idea that a person is low-to-moderate income living in a low-to-moderate income area strictly due to financial irresponsibility, which may not be the case at all, and doesn't consider things like opportunities for education. But that's a much bigger topic, and I'm not expecting Amex at all to care about much beyond their risk parameters and revenue, so please don't consider my thinking to suggest they should start caring at any time.)

I don't know. Amex began as a lender that catered to high-income individuals with significant and frequent purchasing, and I personally feel they've never really changed their philosophy. They began to accept people with lower incomes and created revolving cards for more modest purchasing (like groceries), but they are also easily spooked in return. It's like you've taken a fish out of water, in a way--they're out of their element, and therefore gasp for air.

I dunno, this post is all over the place. It's late... I hope I'm understood.

---

+1

I agree with everything, with special emphasis on the bold print.  I've said for a while that Amex is really a charge card company masquerading as a credit card company.  Historically, they did cater to higher-income individuals, and I believe the ham-handed way in which they have attempted to expand their offerings to other demographics reflects this.

My take-away from this thread is that it's good to have an Amex (or two), but not to 'depend' on one for critical needs.  Note that I said, "my" - this doesn't apply to everyone, but for my own comfort level, I prefer to deal with lenders who aren't as concerned with the minutia of my day-to-day habits.  This being said, my Amex cards still have a place in my portfolio, namely for the rewards, however if they someday decide that I'm no longer a 'desired customer' it won't be catastrophic.

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Absolutely agree with not depending on Amex, or any other major cards for critical needs. Money in the bank is best. That said, I have found my local credit union cards to be the most reliable in that regard. Never in my life of using local credit union credit cards, have I ever had a negative experience with AA, FR or CLDs. I've got over 30 years experience of having CU cards to draw on.