topic Re: Account closures, adverse action and general thoughts in Credit Cards

Account closures, adverse action and general thoughts

Anonymous — Fri, 21 Apr 2017 23:32:38 GMT

There have been several posts about account closures and advers action recently. I just wanted to post a few thoughts about this and credit in general. I apologize for the long rambling nature of this post.

Banks are in business to make money. If a bank acts it is for a reason. Due to the nature of these forums we never get the whole story. This could be because information is purposely left out or there are factors that the poster doesn’t realize affect the situation are in play.

Ever since the Patriot Act financial institutions have been under increased scrutiny and are required to report “suspicious activity” to FinCEN(Financial Crimes Enforcement Network). What actually entails suspicious activity is murky at best but beyond certain specifics each banks legal team tries to set up policies and procedures to protect the bank since they could end up in a serious legal situation for not acting.

If you trip and internal trigger for a SAR(Suspicious Activity Report) at one bank they can now request information from other banks for more information. Say you pay BOA $10000 from Chase and BOA thinks it’s suspicious since you list your income as $30000 they can request information from Chase so they can investigate.

The big thing is that banks are not allowed to inform the customer that a SAR has been filed.There are many false SAR filed and FinCen doesn’t look at all of them but if you trigger more than 1-2 I wouldn’t be surprised for a bank to protect itself and act. Once again, they will not tell you because they are not allowed to.

So how do you avoid this? No body knows LOL. Just step back and think of how your transaction can appear to the bank and realize that a computer algorithm is scanning for abnormalities. There are far too many customers and transactions for manual review. Avoid the usual well known triggers like anonymous bill pay, large cash transactions, transactions that could appear as structuring etc. and the vast majority will never have a problem.

The other reasons could be just plain old risk management and changes within the bank that make it necessary to realign its portfolio. Comenity and Synchrony are good examples. Cap 1 wanting those large credit lines to be used. They can’t have their reserves tied up in nonperforming assets. It makes sense when you think about it.

There is frequent tendency of sprees, the flavor of the month, applying for any card you can get etc. of posters here. Please no matter where you are in life or what your Fico is just stop for a minute and think before you act. Don’t get 12 Comenity cards just because you can. Will a stack of $200 cards to places you don’t shop really help? Have a plan, yes an actual thought out plan for the next year and what each card's job is and what it would take to “fire” each card. Many would be better off if they focused on quality over quanity.

Remember this isn't a compitition and it isn't a race, it's a journey, Don't compare your credit lines, number of cards, Fico score etc. None of it matters. Just use the most information you can get to make the best decisions you can for you and your family. That is all that matters.

Also just because everything is peachy today doesn’t mean it will be tomorrow. Have a backup plan for all your banking needs. We have checking account set up and ready to go at 3 different institutions and credit at many more so that several can be “lost” with no adverse effect.

On last thought is that banks track virtually every interaction you have with them. In the days of fully computerized databased it shouldn’t come as a surprise. There is something to be said for “not poking the bear.” Or at least taking a moment and making sure all of your affairs are in order before you do.

Again, sorry for rambling. Good luck to everyone.

Re: Account closures, adverse action and general thoughts

Anonymous — Sat, 22 Apr 2017 01:38:20 GMT

You make great points. I will add my own thoughts. Because of the nature of this forum, a lot of folks here are building or rebuilding (others like myself are just credit obsessed LOL); therefore, there is a lot of credit seeking going on and people post about it. While most here are trying to better themselves, the banks' risk programs and yes, Anti Money Laundering (AML) programs do not take this into account-they just see it as possible fraud or suspicious activity. That said, it is to be expected that some posters are going to trigger these systems and suffer AA for what the banks may view as aggressive credit seeking.

But, I think there is overall general tightening of the purse strings at many of the banks right now. Maybe because the economy has finally, completely recovered from the Great Recession, the banks no longer have to rely on credit cards for quick, easy business and are therefore slowing down; or, they are preparing for something on the horizon.

Having previously worked for a credit card bank I can tell you that for every once of us that is an active poster or a lurker that is genuinely trying to improve their credit, there are those that lurk to learn how to manipulate the system and obtain the maximum credit they can for fraudulent purposes. There were specific geographic areas that experienced more fraud than others (shaking my head at you, Southern California) and a lot of times banks will look at that for trends and patterns. A manual review of activity can sometimes identify a rebuilder...but most banks are too large for a manual review and so the computer does the dirty work for the bank. As you said in your post, people need to use some self control. There is no need for 12 store cards; do you really need a $50K Discover limit? Etc etc etc.

That said, I appreciate those that post their experience so that others can be on the look out.

Re: Account closures, adverse action and general thoughts

SouthJamaica — Sat, 22 Apr 2017 02:28:18 GMT

@Anonymous wrote:
There have been several posts about account closures and advers action recently. I just wanted to post a few thoughts about this and credit in general. I apologize for the long rambling nature of this post.

Banks are in business to make money. If a bank acts it is for a reason. Due to the nature of these forums we never get the whole story. This could be because information is purposely left out or there are factors that the poster doesn’t realize affect the situation are in play.

Ever since the Patriot Act financial institutions have been under increased scrutiny and are required to report “suspicious activity” to FinCEN(Financial Crimes Enforcement Network). What actually entails suspicious activity is murky at best but beyond certain specifics each banks legal team tries to set up policies and procedures to protect the bank since they could end up in a serious legal situation for not acting.

If you trip and internal trigger for a SAR(Suspicious Activity Report) at one bank they can now request information from other banks for more information. Say you pay BOA $10000 from Chase and BOA thinks it’s suspicious since you list your income as $30000 they can request information from Chase so they can investigate.

The big thing is that banks are not allowed to inform the customer that a SAR has been filed.There are many false SAR filed and FinCen doesn’t look at all of them but if you trigger more than 1-2 I wouldn’t be surprised for a bank to protect itself and act. Once again, they will not tell you because they are not allowed to.

So how do you avoid this? No body knows LOL. Just step back and think of how your transaction can appear to the bank and realize that a computer algorithm is scanning for abnormalities. There are far too many customers and transactions for manual review. Avoid the usual well known triggers like anonymous bill pay, large cash transactions, transactions that could appear as structuring etc. and the vast majority will never have a problem.

The other reasons could be just plain old risk management and changes within the bank that make it necessary to realign its portfolio. Comenity and Synchrony are good examples. Cap 1 wanting those large credit lines to be used. They can’t have their reserves tied up in nonperforming assets. It makes sense when you think about it.

There is frequent tendency of sprees, the flavor of the month, applying for any card you can get etc. of posters here. Please no matter where you are in life or what your Fico is just stop for a minute and think before you act. Don’t get 12 Comenity cards just because you can. Will a stack of $200 cards to places you don’t shop really help? Have a plan, yes an actual thought out plan for the next year and what each card's job is and what it would take to “fire” each card. Many would be better off if they focused on quality over quanity.

Remember this isn't a compitition and it isn't a race, it's a journey, Don't compare your credit lines, number of cards, Fico score etc. None of it matters. Just use the most information you can get to make the best decisions you can for you and your family. That is all that matters.

Also just because everything is peachy today doesn’t mean it will be tomorrow. Have a backup plan for all your banking needs. We have checking account set up and ready to go at 3 different institutions and credit at many more so that several can be “lost” with no adverse effect.

On last thought is that banks track virtually every interaction you have with them. In the days of fully computerized databased it shouldn’t come as a surprise. There is something to be said for “not poking the bear.” Or at least taking a moment and making sure all of your affairs are in order before you do.

Again, sorry for rambling. Good luck to everyone.

I disagree with your entire argument.

Banks enter into a deal with us, and being bigger than us, they set the terms, so they should be comfortable with them.

If we hold up our end of the deal the banks should hold up theirs.

Perceived self protection is never an excuse for a bank's dishonoring its obligations.

If the customer breaches his or her agreement with the bank, the bank is justified in pulling the rug out.

Otherwise it is not.

Re: Account closures, adverse action and general thoughts

AverageJoesCredit — Sat, 22 Apr 2017 02:32:01 GMT

I need 50K on my Discover if only to say ive discovered the key to Discovers cli process

Re: Account closures, adverse action and general thoughts

Anonymous — Sat, 22 Apr 2017 03:51:34 GMT

@SouthJamaica wrote:
@Anonymous wrote:
There have been several posts about account closures and advers action recently. I just wanted to post a few thoughts about this and credit in general. I apologize for the long rambling nature of this post.

Banks are in business to make money. If a bank acts it is for a reason. Due to the nature of these forums we never get the whole story. This could be because information is purposely left out or there are factors that the poster doesn’t realize affect the situation are in play.

Ever since the Patriot Act financial institutions have been under increased scrutiny and are required to report “suspicious activity” to FinCEN(Financial Crimes Enforcement Network). What actually entails suspicious activity is murky at best but beyond certain specifics each banks legal team tries to set up policies and procedures to protect the bank since they could end up in a serious legal situation for not acting.

If you trip and internal trigger for a SAR(Suspicious Activity Report) at one bank they can now request information from other banks for more information. Say you pay BOA $10000 from Chase and BOA thinks it’s suspicious since you list your income as $30000 they can request information from Chase so they can investigate.

The big thing is that banks are not allowed to inform the customer that a SAR has been filed.There are many false SAR filed and FinCen doesn’t look at all of them but if you trigger more than 1-2 I wouldn’t be surprised for a bank to protect itself and act. Once again, they will not tell you because they are not allowed to.

So how do you avoid this? No body knows LOL. Just step back and think of how your transaction can appear to the bank and realize that a computer algorithm is scanning for abnormalities. There are far too many customers and transactions for manual review. Avoid the usual well known triggers like anonymous bill pay, large cash transactions, transactions that could appear as structuring etc. and the vast majority will never have a problem.

The other reasons could be just plain old risk management and changes within the bank that make it necessary to realign its portfolio. Comenity and Synchrony are good examples. Cap 1 wanting those large credit lines to be used. They can’t have their reserves tied up in nonperforming assets. It makes sense when you think about it.

There is frequent tendency of sprees, the flavor of the month, applying for any card you can get etc. of posters here. Please no matter where you are in life or what your Fico is just stop for a minute and think before you act. Don’t get 12 Comenity cards just because you can. Will a stack of $200 cards to places you don’t shop really help? Have a plan, yes an actual thought out plan for the next year and what each card's job is and what it would take to “fire” each card. Many would be better off if they focused on quality over quanity.

Remember this isn't a compitition and it isn't a race, it's a journey, Don't compare your credit lines, number of cards, Fico score etc. None of it matters. Just use the most information you can get to make the best decisions you can for you and your family. That is all that matters.

Also just because everything is peachy today doesn’t mean it will be tomorrow. Have a backup plan for all your banking needs. We have checking account set up and ready to go at 3 different institutions and credit at many more so that several can be “lost” with no adverse effect.

On last thought is that banks track virtually every interaction you have with them. In the days of fully computerized databased it shouldn’t come as a surprise. There is something to be said for “not poking the bear.” Or at least taking a moment and making sure all of your affairs are in order before you do.

Again, sorry for rambling. Good luck to everyone.
I disagree with your entire argument.

Banks enter into a deal with us, and being bigger than us, they set the terms, so they should be comfortable with them.

If we hold up our end of the deal the banks should hold up theirs.

Perceived self protection is never an excuse for a bank's dishonoring its obligations.

If the customer breaches his or her agreement with the bank, the bank is justified in pulling the rug out.

Otherwise it is not.

But part of the contract is clearly "at will", any side can cancel at any time, so you are choosing to ignore that part of the contract.

On the AML side, it's the government setting the (frequently changing) rules, and the penalties for non-compliance can be extremely large, causing banks to err on the side of caution. And it's probably getting to be the same on the credit side, large unsued CLs are going to impact the bank's ability to withstand stress tests, so again the pressure is to be conservative.

As any business, banks have an expectation of "normal", many people here fall way outside that category (large number of cards, frequent requests for CLIs, small utilization of existing credit) and banks don't have the time or desire to examine each case on their merits. Losing a few otherwise good customers is a small price to pay for avoiding big losses. Yes, we don't like it, but that's not their problem as long as there are enough normals.

You may disagree with the OP, but that's reality!

Re: Account closures, adverse action and general thoughts

CreditMagic7 — Sat, 22 Apr 2017 04:53:25 GMT

@AverageJoesCredit wrote:
I need 50K on my Discover if only to say ive discovered the key to Discovers cli process

Good for you.

It's taken my Discover Card 4 years to make it just barely over $10K.

They might even be doing a favor if they just crashed the whole thing and done but then again as a matter of no-brainer practice you don't go maxing out individual lines to DARE them to take closure action.

Utility is such a sensitive element and not only just in FICO's rulebook

Re: Account closures, adverse action and general thoughts

Anonymous — Sat, 22 Apr 2017 06:28:25 GMT

Maybe $1trillion+ student loan debt and another $1 trillion+ credit card debt has something to do with this? (got the numbers from another website, not quoting from any government agency)

Re: Account closures, adverse action and general thoughts

CreditMagic7 — Sat, 22 Apr 2017 06:55:49 GMT

@Anonymous wrote:
Maybe $1trillion+ student loan debt and another $1 trillion+ credit card debt has something to do with this? (got the numbers from another website, not quoting from any government agency)

As long as there's plenty of currency note paper and ink, the printing machines will continue nonstop to zoom out all the cash the big businesses and gov will ever want to spend it for.

Oh yes and for those institutions that operate from PLASTIC, there seems to be plenty a surplus of that too.

Re: Account closures, adverse action and general thoughts

Anonymous — Sat, 22 Apr 2017 09:06:47 GMT

Great post. Basically summed up what I have been thinking. Be careful to match all information across your financial institutions or lenders such as income and address. Grow current limits in what would appear normal and not credit seeking. Do not do anything that would make you stand out or could throw up a red flag in the algorithms.

I completely agree that its wrong for a lender to take AA if you have been a loyal customer for many years and Have never missed payments or anything else wrong.. However, when you are giving people $50-100k to spend in any way at any time: I understand them being cautious especially after 2000/2008. I'm not saying it's right, but I do understand.

Re: Account closures, adverse action and general thoughts

Anonymous — Sat, 22 Apr 2017 21:11:19 GMT

@Anonymous wrote:
You make great points. I will add my own thoughts. Because of the nature of this forum, a lot of folks here are building or rebuilding (others like myself are just credit obsessed LOL); therefore, there is a lot of credit seeking going on and people post about it. While most here are trying to better themselves, the banks' risk programs and yes, Anti Money Laundering (AML) programs do not take this into account-they just see it as possible fraud or suspicious activity. That said, it is to be expected that some posters are going to trigger these systems and suffer AA for what the banks may view as aggressive credit seeking.

But, I think there is overall general tightening of the purse strings at many of the banks right now. Maybe because the economy has finally, completely recovered from the Great Recession, the banks no longer have to rely on credit cards for quick, easy business and are therefore slowing down; or, they are preparing for something on the horizon.

Having previously worked for a credit card bank I can tell you that for every once of us that is an active poster or a lurker that is genuinely trying to improve their credit, there are those that lurk to learn how to manipulate the system and obtain the maximum credit they can for fraudulent purposes. There were specific geographic areas that experienced more fraud than others (shaking my head at you, Southern California) and a lot of times banks will look at that for trends and patterns. A manual review of activity can sometimes identify a rebuilder...but most banks are too large for a manual review and so the computer does the dirty work for the bank. As you said in your post, people need to use some self control. There is no need for 12 store cards; do you really need a $50K Discover limit? Etc etc etc.

That said, I appreciate those that post their experience so that others can be on the look out.

There has been lots of talk about changing bank regulations recently. Banks may be cleaning up and trying to position themselves for acquisitions or to enter new areas of business etc.

Re: Account closures, adverse action and general thoughts

Anonymous — Sat, 22 Apr 2017 21:13:15 GMT

@SouthJamaica wrote:

I disagree with your entire argument.
Banks enter into a deal with us, and being bigger than us, they set the terms, so they should be comfortable with them.
If we hold up our end of the deal the banks should hold up theirs.
Perceived self protection is never an excuse for a bank's dishonoring its obligations.
If the customer breaches his or her agreement with the bank, the bank is justified in pulling the rug out.
Otherwise it is not.

I think LTL has replied to your post as well as I can but I will say that it shows another negative. Far too many card holders never even glance at the Card Holder Agreement that governs their account. As stated either side can walk away at any time for any reason. It's all in the agreement.

Re: Account closures, adverse action and general thoughts

Anonymous — Sat, 22 Apr 2017 21:18:44 GMT

@AverageJoesCredit wrote:
I need 50K on my Discover if only to say ive discovered the key to Discovers cli process

OK but don't end up like Icarus

Re: Account closures, adverse action and general thoughts

sarge12 — Sat, 22 Apr 2017 21:54:13 GMT

I personally feel the banks have the right to cut the CL or close cards for any reason or no reason, as they should. I as a consumer also have the right to sever the relationship for reason or no reason at all. I think AA such as CLD is sometimes done not because the customer represents greater risk, but as a means of risk reduction across the board, or to free up capital for more profitable segments of the market. The highest scoring profiles are sometimes the least likely to be very profitable to credit card issuers due to low utilization and that many are strict transactors such as myself. I may not like it if they take AA against me to free up funds for more profitable customers, but I do understand why they might choose to do so. I have never felt it was my right to carry their cards, but I use the cards in such a way that any AA taken will only have a minor impact on my credit in any case.

Re: Account closures, adverse action and general thoughts

Anonymous — Sat, 22 Apr 2017 22:18:03 GMT

The OP has said, or put into words, pretty much all of the arguments I've been making over the past few weeks. @longtimelurker also makes an important point that probably isn't often thought about, to-wit that the active people here are, in fact, pretty much outliers as far as the general credit-using population is concerned. For instance, I think that while a lot of people have heard about the 30% utilization target and do their best to keep as close as they can to that, I doubt that most people are as, well, passionate about keeping utilization to the absolute minimum and PIF'ing on everything as some of the folks here. Also, I suspect that most "normals" aren't as on fire about expanding their available credit to the maximum possible (a lot of people may not even know there's a facility on their account pages to apply for increases in credit lines) as the active community here.

Re: Account closures, adverse action and general thoughts

sarge12 — Sat, 22 Apr 2017 22:46:41 GMT

@Anonymous wrote:
@Anonymous OP has said, or put into words, pretty much all of the arguments I've been making over the past few weeks. @Anonymous also makes an important point that probably isn't often thought about, to-wit that the active people here are, in fact, pretty much outliers as far as the general credit-using population is concerned. For instance, I think that while a lot of people have heard about the 30% utilization target and do their best to keep as close as they can to that, I doubt that most people are as, well, passionate about keeping utilization to the absolute minimum and PIF'ing on everything as some of the folks here. Also, I suspect that most "normals" aren't as on fire about expanding their available credit to the maximum possible (a lot of people may not even know there's a facility on their account pages to apply for increases in credit lines) as the active community here.

I agree...we ask for CLI's in order to easily control utilization, resulting in a large amount of unused credit. We should really not be surprised when this activity, which many of us take to the extremes, results in AA's. The issuers motivation for increasing the CL is in hopes of greater us of the cards, not to help us achieve higher credit scores. The public at large has no idea how to do this...we are in a way gaming the system...we know what is in the score, and use this info to our advantage. Many of us also reap the greatest amount of rewards we can while never paying a penny in interest. It greatly benefits us, but provides almost no incentive for the issuer to not take AA against us, as we are by design less profitable to the issuer. If we are honest, we should admit that we push our luck somewhat.

Re: Account closures, adverse action and general thoughts

JRAGS28 — Sat, 22 Apr 2017 23:03:46 GMT

Very nicely written .... Job well done.. Thanks

Re: Account closures, adverse action and general thoughts

Anonymous — Sun, 23 Apr 2017 01:08:38 GMT

@AverageJoesCredit wrote:
I need 50K on my Discover if only to say ive discovered the key to Discovers cli process

Greedy

Re: Account closures, adverse action and general thoughts

Anonymous — Sun, 23 Apr 2017 02:08:40 GMT

Well the problem today is is that college kids are going to lie about their income to get spending money to do what they do. Now credit card companies rarely ask for proof of your income. But credit card companies only are making money off of you because of interest. Now what hurts you is when a college kid maxes out his credit card and closes his account(because he dont care). One that pays his bills on time but carry a balance etc are what credit card companies like. They still make a profit off of them. Everyone in college has lied about their income. No need to take shame to it. Because I gaurantee 85% of people did it. No red flags are thrown up if you pay your bills on time, carry a little balance, and dont apply for 5 cards a month.

Re: Account closures, adverse action and general thoughts

Anonymous — Sun, 23 Apr 2017 03:48:20 GMT

@Anonymous wrote:
But credit card companies only are making money off of you because of interest.

No red flags are thrown up if you pay your bills on time, carry a little balance, and dont apply for 5 cards a month.

Well, cccs still make money off swipe fees (and annual fees for that matter), while interest is good, it is also a risk for them (as there is a balance outstanding)

To avoid AA everywhere with your method, you would need to do this for every card, which can impact score and cost some if you have too many cards.

Plus, there are certainly other things that could cause AA even if you were doing this

Re: Account closures, adverse action and general thoughts

Anonymous — Sun, 23 Apr 2017 04:36:35 GMT

Many good posts on this topic. My thoughts 1) When the bank gives you $xx they have to set up reserves to cover this. If you don't use this account it still costs them money.

2) The banks business is to loan money not provide unused loans. 3) Many people in this forum are very aware of score max. and will add extra cl to keep themslves below 29% and 9% respectfully 5) Some of these limits are beyond reason and never should have been granted in the first place 6) Some banks try to match cli for cli with other cards . This happened with my DW She has asked for virtually no cli but gets auto cli every 6 months 7) The total amount of credit on some of these is impossible not just the one $45K credit card but the fact the person has $450K in card credit limits. Can you imagine trying to pay this off? We owe no house payment no car payments and have a business that generates 6 figures a year. It would take us many years to we had these total limits to pay them off. If the person had a car and house payment the task would be 20 to 30 years. At that point to not a credit card loan its a lifetime loan. If I were a lifetime lender I would want more docs 8) I for one do believe the card co should trust the computer to set the limts in many of these cases as many here know how to game the computer for better cli. Starter cards great computer sets but cli have the credit looked at manually.

I know some of the actions here at the Backwoods house would cause alarm. We had $500K in our checking account for months while we were looking for our current house. We spent over $20K one weekend our our debit card when we redid our kitchen.(Had to call in for ulimited use over the weekend)

Yes we did get balance chased and cld from 2006 to 2009. As we paid down they reduced and finaly we closed. This was not one card it was several. Every month another $500 to $1000 to cover the cld so we would be under limit. The final result was a debit card and nothing else. It was the most miserable times of our life. Our income for most of thime was terrible also.