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Established Contributor
okstatefan5945
Posts: 517
Registered: ‎04-13-2009
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Credit Limit Decreases Getting Creative??

Ok just saw a local news cast that did a feature on credit. They said in the midst of the credit crunch companies are getting creative. They did a report on one man who got a letter from AMEX that decreased his limit from $10k to $3800. The reason on his letter which they showed stated that AMEX had noticed that customers who made purchases at the same locations he was had a poor repayment history. He got this notice shortly after getting back from a honeymoon and said that was the only irregular shopping he had done. He had perfect repayment history and used the card often. They also interviewed an "expert" who said that companies were decreasing limits on consumers who change spending habits especially those that normally shop at upscale establishments starting to shop at Wal-Mart in the down economy and saying that is risky behavior. Dont know if anyone else has seen or heard of this but I found it very interesting. I have seen some posts about people upset about CLD's and not knowing why. This could be a factor? Interesting observation overall and thought I would throw this out there for everyone.

 

 

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2011 Credit Goals
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Senior Contributor
creditwherecreditisdue
Posts: 4,923
Registered: ‎04-19-2009
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Re: Credit Limit Decreases Getting Creative??

Nothing new here. This has been SOP for Amex for most of 2009. The practice is sufficiently marginal that study of the issue has been mandated by the Credit CARD Act of 2009.
Established Contributor
okstatefan5945
Posts: 517
Registered: ‎04-13-2009
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Re: Credit Limit Decreases Getting Creative??

Oops didnt realize it wasnt new news. Forgive the newbie. LOL.
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2011 Credit Goals
1. No Lates
2. Join the 700 club
3. No inquiries
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Senior Contributor
creditwherecreditisdue
Posts: 4,923
Registered: ‎04-19-2009
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Re: Credit Limit Decreases Getting Creative??

It is a dreadful practice! If a merchant is considered good enough to accept an Amex card you should not be penalized for using yours there. The WalMart portion of that story is apparently quite true. How pathetic. Don't be surprised to find the study slams this practice and that it is curbed in the future.
Established Contributor
Watchmann
Posts: 987
Registered: ‎05-14-2008
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Re: Credit Limit Decreases Getting Creative??


creditwherecreditisdue wrote:
It is a dreadful practice! If a merchant is considered good enough to accept an Amex card you should not be penalized for using yours there. The WalMart portion of that story is apparently quite true. How pathetic. Don't be surprised to find the study slams this practice and that it is curbed in the future.

 

Not dreadful at all.  A card issuer wants to maximize a card's use and repayment, and all of them have been stiffed over the last couple of years.  If you see a holder going from a steady use at Ruth's Chris Steakhouse, down to Outback, and then to Sonic you have every right to be wary that something is happening with the user.  Just because they continue to pay the bill is only part of the story.  AMEX and other issuers have heavy duty AI systems in place that work all day and night sorting and sifting data to discern trends.  If this so-called 'study' inhibits and prohibits the CCC's from adjusting credit lines as they see it you'll just get more credit withheld from everyone.  Similar to how CL's are being cut and APR's increased at this point.  Anytime you get Congress involved to 'fix' and 'punish' these companies they make it worse from a general standpoint.  So we are now heading back to high interest rates and annual fees, just like it was in the 70's.  If you think this is progress you are welcome to it. 
Valued Contributor
usmc58555
Posts: 1,668
Registered: ‎02-18-2009
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Re: Credit Limit Decreases Getting Creative??


creditwherecreditisdue wrote:
It is a dreadful practice! If a merchant is considered good enough to accept an Amex card you should not be penalized for using yours there. The WalMart portion of that story is apparently quite true. How pathetic. Don't be surprised to find the study slams this practice and that it is curbed in the future.

My Zip Code where I lived was a strong component of my car insurance payment. I moved one city/zip code over and dropped my car insurance payment by $30.00 a month.
 

Signature line begins:
Credit is not a right, but a business transaction, one that takes into account risk, and charges accordingly based on that risk.
Your credit score is an aspect of your credit profile. Important? yes but just an aspect. Contributing/supplemental information determines the finer point of the deal. Ask any question, respect me not to get mad if the answer is not the affirmation you are looking for,
Senior Contributor
creditwherecreditisdue
Posts: 4,923
Registered: ‎04-19-2009
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Re: Credit Limit Decreases Getting Creative??

It is an abhorant practice. If Amex doesn't like you using your card at certain merchants they should not allow them to accept it.

 

SEC. 505. REPORT TO CONGRESS ON REDUCTIONS OF CONSUMER CREDIT CARD LIMITS BASED ON CERTAIN INFORMATION AS TO EXPERIENCE OR TRANSACTIONS OF THE CONSUMER.

(a) Report on Creditor Practices Required- Before the end of the 1-year period beginning on the date of enactment of this Act, the Board, in consultation with the Comptroller of the Currency, the Director of the Office of Thrift Supervision, the Federal Deposit Insurance Corporation, the National Credit Union Administration Board, and the Federal Trade Commission, shall submit a report to the Committee on Financial Services of the House of Representatives and the Committee on Banking, Housing, and Urban Affairs of the Senate on the extent to which, during the 3-year period ending on such date of enactment, creditors have reduced credit limits or raised interest rates applicable to credit card accounts under open end consumer credit plans based on--

(1) the geographic location where a credit transaction with the consumer took place, or the identity of the merchant involved in the transaction;

(2) the credit transactions of the consumer, including the type of credit transaction, the type of items purchased in such transaction, the price of items purchased in such transaction, any change in the type or price of items purchased in such transactions, and other data pertaining to the use of such credit card account by the consumer; and

(3) the identity of the mortgage creditor which extended or holds the mortgage loan secured by the primary residence of the consumer.

(b) Other Information- The report required under subsection (a) shall also include--

(1) the number of creditors that have engaged in the practices described in subsection (a);

(2) the extent to which the practices described in subsection (a) have an adverse impact on minority or low-income consumers;

(3) any other relevant information regarding such practices; and

(4) recommendations to the Congress on any regulatory or statutory changes that may be needed to restrict or prevent such practices.

Established Contributor
Posts: 513
Registered: ‎04-03-2007
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Re: Credit Limit Decreases Getting Creative??


Watchmann wrote: 
  Anytime you get Congress involved to 'fix' and 'punish' these companies they make it worse from a general standpoint.  So we are now heading back to high interest rates and annual fees, just like it was in the 70's.  If you think this is progress you are welcome to it. 

Some people who cheered the Congressional credit card "reforms" are now demanding further legislation. I have repeatedly condemned the "reforms" as PRO Big Bank Legislation. I have predicted the current state of affairs and many scoffed when I called the reforms a ploy to increase the bank's revenue across the board.

 

You sir being the vigilant "Watchman" that you are were among the few who saw the handwriting on the wall when many were thrilled that the naughty banks were finally getting their hands slapped. The reality is that our elected officials have not been slapping the banks' hands. . Our government has  only succeeded in slapping the faces of the consumer!  The government is owned by the banks. The laws are made for the banks by the banks. We will continue to get slapped in the face until we stop thanking the politicians when they do it. :smileyindifferent:

 

 

 

Senior Contributor
creditwherecreditisdue
Posts: 4,923
Registered: ‎04-19-2009
0

Re: Credit Limit Decreases Getting Creative??

Redlining was once a legal practice, too.
Valued Contributor
usmc58555
Posts: 1,668
Registered: ‎02-18-2009
0

Re: Credit Limit Decreases Getting Creative??

Credit cards are unsecured debt.

 

The first thing not paid when people have difficulty.

 

I cannot see how increased regulation and legislation, that would decrease profits and increase risk would cause them to be easier to get, or increase credit limits for the masses.


(car loans are kinda the opposite- as long as the car runs they are second only to House payments in what people value to pay. Funnily enough, lose your car due to needed repairs or something like that, and most people immediately no longer put making their car payment on their priority list.)

Signature line begins:
Credit is not a right, but a business transaction, one that takes into account risk, and charges accordingly based on that risk.
Your credit score is an aspect of your credit profile. Important? yes but just an aspect. Contributing/supplemental information determines the finer point of the deal. Ask any question, respect me not to get mad if the answer is not the affirmation you are looking for,

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