"Loyalty" from issuers when debt accumulates?

[wasCB14]

Who here has had a large amount of CC debt accumulate...let's say 50% or more of your annual income...and had no lenders take AA (APR hikes, CLDs, closures)? Some lenders? Most or all?

Was the AA from the issuer(s) who much of the debt was with, or banks whose CLs were barely used? How did CUs respond vs. banks?

I'm curious as to how useful diversification and backups are when things get really bad. If someone's finances are in such bad shape that a third of cards get AA'ed, how long will it be until the other 2/3 are affected?

[Anonymous]

CC debt (utilization) in and of itself will rarely result in AA.  There have been examples of people being at maxed out 90%-100% utilization for extended periods of time that never received AA from those they were maxed out with or those that they weren't maxed out with.  The game changer is when a change comes to payment history.  If you miss a payment, all bets are off and that utilization DOES become a problem and AA will follow.  If one is able to continue making on-time payments month after month, lenders are more than willing to sit back and collect on interest and have no reason to take AA until they see a reason (late payment) that may suggest that you'll STOP making those on-time payments.

[K-in-Boston]

I unfortunately became somewhat of an expert on this subject a decade ago.  Things certainly can domino quickly.  Usually one lender doing AA won't cause every other to freak out, but if you get several things can escalate quickly.  Going by memory here as I glance down a CB report, but from my experience:

American Express - no AA ever. No rate jacking, no cutting off spending ability. My rock and they forever have me as a loyal customer. I owed them upward of $45k at one point just on two POT balances.

Bank of America - rate jacked me and DW.

Capital One - no AA

CBNA (Shell, NTB, Home Depot, Best Buy) - no AA

Chase - while they left my cards alone (except for an old Providian card they acquired which they closed immediately after acquiring), they put the Chase in balance chase for DW.  Over and over again.  Limit still nowhere near recovered even after a $10k CLI this year.

Citi - balance chased DW month after month for about 2 years.  Even after $9k in SP CLIs this year, it's still about $10k less than the high balance was in 2007.  Also rate jacked to death but thanks to this forum I got it lowered from like 26.49% to 14.24% in about a week of chats.

Discover - no AA

FIA - closed a 5 year fixed rate line of credit loan 1 year in with a $13k balance. Ouch.

Kohl's - no AA

Synchrony (then GE Money Bank) - no AA

Target National Bank (at the time) - no AA during that time, they hit me with a CLD when the card switched from store card to Visa around 2005.

Dell Financial Services - no AA

Fingerhut - I made one purchase in the mid-90s.  The account somehow got reopened around 2007 with a 2003 open date after one of many times the accounts transferred to a new lender.  I never used it but no AA until they closed it for "inactivity" like 18 years after my only purchase and 9 years after it was reported as open again.

Some random community bank whose name I can't remember but got purchased by Elan later - no AA.

Hope that helps.  Of course the markets have changed and some lenders have also changed.

[wasCB14]

Thanks for the detailed reply, K!

*Those are pretty sharply different responses, UpperNwGuy!

[UpperNwGuy]

I, too, had a bad spell in the 2000s.

Bank of America.  Cancelled my card without warning when it had a $20,000 balance.  It was my oldest card, dating from 1973.

Citibank.  Jacked up my APR to 25% and kept it there until I got the utilization down.

NFCU.  Was infinitely patient with me.

PenFed.  Was also infinitely patient with me.

[Anonymous]

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@K-in-Boston wrote:

I unfortunately became somewhat of an expert on this subject a decade ago.  Things certainly can domino quickly.  Usually one lender doing AA won't cause every other to freak out, but if you get several things can escalate quickly.  Going by memory here as I glance down a CB report, but from my experience:

American Express - no AA ever. No rate jacking, no cutting off spending ability. My rock and they forever have me as a loyal customer. I owed them upward of $45k at one point just on two POT balances.

Bank of America - rate jacked me and DW.

Capital One - no AA

CBNA (Shell, NTB, Home Depot, Best Buy) - no AA

Chase - while they left my cards alone (except for an old Providian card they acquired which they closed immediately after acquiring), they put the Chase in balance chase for DW.  Over and over again.  Limit still nowhere near recovered even after a $10k CLI this year.

Citi - balance chased DW month after month for about 2 years.  Even after $9k in SP CLIs this year, it's still about $10k less than the high balance was in 2007.  Also rate jacked to death but thanks to this forum I got it lowered from like 26.49% to 14.24% in about a week of chats.

Discover - no AA

FIA - closed a 5 year fixed rate line of credit loan 1 year in with a $13k balance. Ouch.

Kohl's - no AA

Synchrony (then GE Money Bank) - no AA

Target National Bank (at the time) - no AA during that time, they hit me with a CLD when the card switched from store card to Visa around 2005.

Dell Financial Services - no AA

Fingerhut - I made one purchase in the mid-90s.  The account somehow got reopened around 2007 with a 2003 open date after one of many times the accounts transferred to a new lender.  I never used it but no AA until they closed it for "inactivity" like 18 years after my only purchase and 9 years after it was reported as open again.

Some random community bank whose name I can't remember but got purchased by Elan later - no AA.

Hope that helps.  Of course the markets have changed and some lenders have also changed.

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Like I have said before: Chase is the worst. 

[galahad15]

About 2-3 years ago or so, I had a revolving utilization of between 80% - 90%.  Most of the cc issuers I have atm haven taken no AA as far as I can best recall -- most of the AA I received so far to date was during the implementation of CARD Act.  For example:

(1)  BoA:  attempted to RJ during CARD Act, was able to successfully reverse.  Also did a CLD.

(2)  Cap1:  no AA taken so far.

(3)  Chase:  they attempted RJ at the time of CARD Act, so closed out.

(4)  Citi:  tried to RJ 2 cards at the time of CARD Act (I opted out and closed out both).

(5)  Discover:  RJ, was able to partially reverse although not as low as pre-RJ APR.

(6)  FNBO:  no AA taken so far.

(7)  SunTrust:  RJ'd and closed out.

(8)  US Bank:  no AA with current cards, although they did try to RJ during CARD Act; closed out at existing rate.

(9)  CUs:  no AA taken so far.

[Anonymous]

Good thread wasCB14.

[iced]

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@wasCB14 wrote:

Who here has had a large amount of CC debt accumulate...let's say 50% or more of your annual income...and had no lenders take AA (APR hikes, CLDs, closures)? Some lenders? Most or all?

Was the AA from the issuer(s) who much of the debt was with, or banks whose CLs were barely used? How did CUs respond vs. banks?

I'm curious as to how useful diversification and backups are when things get really bad. If someone's finances are in such bad shape that a third of cards get AA'ed, how long will it be until the other 2/3 are affected?

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As someone who wasn't far from this position before, AA was the least of my concerns. The largest limit/balance cards were the first to AA me. I had several cards across several banks, but all of the diversification in the world wasn't going to save me if I didn't reduce those balances and stat. I didn't have the credit to put so much as $500 on a credit card. The only thing that would have made things worse is going out and trying to obtain more credit, so for me diversifying and trying to have more CL spread around would have been disastrous.

I can't comment on CU reactions as I have never had or wanted a CU-backed card in my life.

[-Cal-]

I couldn't imagine getting anywhere near 50% of my income in debt, but I would say that I have pushed the limits with Discover and they've been good to me. They've even given me CLI's while doing 0% transfers with high balances.