topic Re: Account Closures in Credit Cards

Account Closures

Anonymous — Thu, 09 Jan 2020 04:22:29 GMT

Today, I've seen a lot of account closures, not just with DISCOVER, but with BoA and Amex. This is one day. Probably more to come, and with other lenders. We are such a small population, so this might involve 10s of thousands of accounts, if not many more.

I'm not used to this as I've never seen it before. Before this forum, I only paid attention to my accounts. The only real AA I've ever had with any card was back in 2001 when I requested a CLD over the phone and got a bigger one than I wanted. To 0. Account closed.

I've done some wacky stuff with my cards. Maxed out 2 of them and went heavy on a third at the same time in 2008 when it was looking like banks might be sliding over the hill. And did it with the credit lines I pretty much have right now. But no AA.

I looked back at my statements. In February 2009, the low time for banks, I opened my Capital One card and ran up a balance to 13K by summer. Also in February 2009, I got a direct deposit of 30K into my checking account from Citi. 75% util. No AA. If there was ever a time for AA for high risk cardholders, it was back then.

I don't know why this is happening. The economy is excellent. The market is forward looking 6 months. It looks robust for at least the next 6 months. This economy is basically the opposite of 2009.

But something with lending is changing. Maybe it's not a big issue.

What I do know is there has been an explosion in growth of rewards cards. You used to have 1 or 2 cards. Now there are trifectas, 19 cards in a wallet, etc which is not uncommon now. Is there a bubble? All bubbles burst. Maybe there is. Lenders may be trimming their portfolios after they all scrambled to be a leader in the market.

I've always tried to be attractive as possible to the issuers. Not sure if it has any effect or not. I will continue to do so even if it doesn't look like it matters. I was imagining if I got such a letter that one of my accounts was closed. It's a kick in the teeth for sure. I would be offended. And it could happen to me.

If I were to guess, this isn't about the economy, but this is an over saturation of the market. Catch all the fish you can, then keep the best ones. Just my opinion.

Re: Account Closures

wasCB14 — Thu, 09 Jan 2020 04:33:08 GMT

One source of lender caution has been rising default rates on auto loans.

Re: Account Closures

Anonymous — Thu, 09 Jan 2020 04:36:09 GMT

Discover led the charge to get rid of benefits on cards and other issuers followed. Hopefully we don't see the same thing happen with requests for tax transcripts.

Re: Account Closures

M_Smart007 — Thu, 09 Jan 2020 04:37:50 GMT

@Anonymous wrote:
Discover led the charge to get rid of benefits on cards and other issuers followed. Hopefully we don't see the same thing happen with requests for tax transcripts.

Get ready for the Blue envelopes.

Re: Account Closures

Anonymous — Thu, 09 Jan 2020 04:46:55 GMT

@M_Smart007 wrote:
@Anonymous wrote:
Discover led the charge to get rid of benefits on cards and other issuers followed. Hopefully we don't see the same thing happen with requests for tax transcripts.
Get ready for the Blue envelopes.

Oh well. If I lost all my Sync accounts, I would save money because I would cancel Prime and just shop Target. But yes I could definitely see blue envelopes making a comeback.

I guess I am going to file taxes this year with IRS free file project through TurboTax so at the very least I'll have a transcript next year.

Re: Account Closures

Anonymous — Thu, 09 Jan 2020 04:47:44 GMT

@Anonymous wrote:
Today, I've seen a lot of account closures, not just with DISCOVER, but with BoA and Amex. This is one day. Probably more to come, and with other lenders. We are such a small population, so this might involve 10s of thousands of accounts, if not many more.

We are a small population, but probably WAY more risky than the general population! A lot of people come here initially for rebuilding, so they already have some negatives which may be visible to lenders. Then people here tend to have a lot more cards than others, and I'm sure ask for CLI or APR reductions much more than the normals out there. So I don't think you can extrapolate a lot from here.

That said, there may be a trend to more of these being reported here, which is of obviousl interest to us, but again, an increase here might not transfer to the wider world as issuers may be more nervous about us that the average person with a small number of cards they have kept for years.

Re: Account Closures

mikesonthemend — Thu, 09 Jan 2020 04:48:19 GMT

There is a real liquidity crisis. The economy is gangbusters and The Fed is expanding their balance sheet at a rate not seen since 2009. Something is going on.

Re: Account Closures

Anonymous — Thu, 09 Jan 2020 04:58:20 GMT

I think the error is comparing 2020 to 2008-9. It really like 2020=2006. 2005-6 people were still saying "the economy is doing great". Banks have way more sophisticated tools than they did just a decade ago. The signs of the bubble were there back then too but now banks have entire teams dedicated to trying to get ahead of stuff like that. Even without predictors the economy is cyclical. Like winter..the correction is coming. Banks still need to make money so they will still lend. But they are better at protecting themselves.

Re: Account Closures

SouthJamaica — Thu, 09 Jan 2020 05:35:56 GMT

@Anonymous wrote:
Today, I've seen a lot of account closures, not just with DISCOVER, but with BoA and Amex. This is one day. Probably more to come, and with other lenders. We are such a small population, so this might involve 10s of thousands of accounts, if not many more.

I'm not used to this as I've never seen it before. Before this forum, I only paid attention to my accounts. The only real AA I've ever had with any card was back in 2001 when I requested a CLD over the phone and got a bigger one than I wanted. To 0. Account closed.

I've done some wacky stuff with my cards. Maxed out 2 of them and went heavy on a third at the same time in 2008 when it was looking like banks might be sliding over the hill. And did it with the credit lines I pretty much have right now. But no AA.

I looked back at my statements. In February 2009, the low time for banks, I opened my Capital One card and ran up a balance to 13K by summer. Also in February 2009, I got a direct deposit of 30K into my checking account from Citi. 75% util. No AA. If there was ever a time for AA for high risk cardholders, it was back then.

I don't know why this is happening. The economy is excellent. The market is forward looking 6 months. It looks robust for at least the next 6 months. This economy is basically the opposite of 2009.

But something with lending is changing. Maybe it's not a big issue.

What I do know is there has been an explosion in growth of rewards cards. You used to have 1 or 2 cards. Now there are trifectas, 19 cards in a wallet, etc which is not uncommon now. Is there a bubble? All bubbles burst. Maybe there is. Lenders may be trimming their portfolios after they all scrambled to be a leader in the market.

I've always tried to be attractive as possible to the issuers. Not sure if it has any effect or not. I will continue to do so even if it doesn't look like it matters. I was imagining if I got such a letter that one of my accounts was closed. It's a kick in the teeth for sure. I would be offended. And it could happen to me.

If I were to guess, this isn't about the economy, but this is an over saturation of the market. Catch all the fish you can, then keep the best ones. Just my opinion.

And if I were to guess, it is once again about deregulation and bad practices in the financial sector which are catching up to the players. Moral hazard, derivatives, deregulation, securitization, collateralization, too big to fail, and the bizarre explosion of wealth being pulled from the working class to the wealthy.

Re: Account Closures

eastsea — Thu, 09 Jan 2020 08:15:31 GMT

@Anonymous wrote:

Now there are trifectas, 19 cards in a wallet, etc which is not uncommon now.

I would venture to say 19 cards in a wallet is indeed uncommon among general population.

Re: Account Closures

redpat — Thu, 09 Jan 2020 09:13:15 GMT

Most don't need over 200k in available credit. 3x Amex CLI is probably the most famous threads here.

I think ones available credit might come into play vs. income when the creditors know it impossible to pay if it gets that high. This is way they are starting to ask about savings and liquid assets for CLIs.

Sure I wanted to see how much I could get for fun then I closed cards reducing about 120k in credit because I didn't need or couldn't use it. There is what you call padding but some really over pad their credit.

So must of us won't hear from a creditor regarding these matters. My focus is on rewards for enjoying travel at a greatly reduced cost, so having 19 cards and 500k in credit can't do that for me.

Re: Account Closures

Gmood1 — Thu, 09 Jan 2020 10:54:42 GMT

The economy is excellent? Maybe on the surface. If you look deep enough, you'll find the cracks. The trucking industry isn't collapsing for no reason at all.

I've already had a couple of my limits reduced by the lenders. I expect a few more. No biggie, not going to lose sleep over it.
I do have a lot of unsecured credit though. It comes with the territory.

This is one of the reasons I gravitate to the CUs over the BIG banks. They're not immune either.
But I feel, they generally leave you be as long as you're not defaulting or on the cusp of defaulting.

Re: Account Closures

CreditInspired — Thu, 09 Jan 2020 11:01:16 GMT

@Anonymous wrote:
@Anonymous wrote:
Today, I've seen a lot of account closures, not just with DISCOVER, but with BoA and Amex. This is one day. Probably more to come, and with other lenders. We are such a small population, so this might involve 10s of thousands of accounts, if not many more.

We are a small population, but probably WAY more risky than the general population! A lot of people come here initially for rebuilding, so they already have some negatives which may be visible to lenders. Then people here tend to have a lot more cards than others, and I'm sure ask for CLI or APR reductions much more than the normals out there. So I don't think you can extrapolate a lot from here.

That said, there may be a trend to more of these being reported here, which is of obviousl interest to us, but again, an increase here might not transfer to the wider world as issuers may be more nervous about us that the average person with a small number of cards they have kept for years.

My thoughts exactly!

Re: Account Closures

Anonymous — Thu, 09 Jan 2020 12:08:23 GMT

Nobody ever seen ecomony crash coming until it hits them in the head. Downturn could be 5 years away, 1 year away, or just months ahead.

Economy is doing great for rich people, but no economy is stable when wealth disparity is shooting through the roof, even rich people knows that.

Re: Account Closures

Anonymous — Thu, 09 Jan 2020 12:40:43 GMT

@wasCB14 wrote:
One source of lender caution has been rising default rates on auto loans.

Could be, but this seems calculated at the time of the year turn. This might be a planned thing in 2020, at least for some issuers.

Re: Account Closures

Anonymous — Thu, 09 Jan 2020 13:02:40 GMT

@Gmood1 wrote:
The economy is excellent? Maybe on the surface. If you look deep enough, you'll find the cracks. The trucking industry isn't collapsing for no reason at all.

I've already had a couple of my limits reduced by the lenders. I expect a few more. No biggie, not going to lose sleep over it.
I do have a lot of unsecured credit though. It comes with the territory.

This is one of the reasons I gravitate to the CUs over the BIG banks. They're not immune either.
But I feel, they generally leave you be as long as you're not defaulting or on the cusp of defaulting.

I look at the DOW transports. They are often a leading indicator of a changing economy. They look good. The logic behind it is if shipping companies (FedEx, UPS, trucking companies) aren't shipping, then people aren't buying (online purchases, stocked shelves aren't turning over, etc.). Not sure if there isn't a glut of trucking companies out there.

Do you think maybe banks are looking to lend at a higher level in 2020, and that unused, bloated CLs on credit cards need to be trimmed to free up credit lines for installment loans or business loans?

Re: Account Closures

Anonymous — Thu, 09 Jan 2020 13:11:59 GMT

@eastsea wrote:
@Anonymous wrote:

Now there are trifectas, 19 cards in a wallet, etc which is not uncommon now.

I would venture to say 19 cards in a wallet is indeed uncommon among general population.

A lot more common than it used to be. Even 8 is a lot. 3 or 4 used to be excessive not too long ago.

Re: Account Closures

Anonymous — Thu, 09 Jan 2020 13:16:48 GMT

@Anonymous wrote:
@Anonymous wrote:
Today, I've seen a lot of account closures, not just with DISCOVER, but with BoA and Amex. This is one day. Probably more to come, and with other lenders. We are such a small population, so this might involve 10s of thousands of accounts, if not many more.

We are a small population, but probably WAY more risky than the general population! A lot of people come here initially for rebuilding, so they already have some negatives which may be visible to lenders. Then people here tend to have a lot more cards than others, and I'm sure ask for CLI or APR reductions much more than the normals out there. So I don't think you can extrapolate a lot from here.

That said, there may be a trend to more of these being reported here, which is of obviousl interest to us, but again, an increase here might not transfer to the wider world as issuers may be more nervous about us that the average person with a small number of cards they have kept for years.

We are, but maybe not more risky. A lot of people here have decent scores, and know how to somewhat manipulate the scoring models to maximize score. But lenders look at more than score. A lot of people carry credit card debt out there, and a lot of people PIF out there as well. We see that mix here too.

We also do maximize CLs here too. But that doesn't explain account closures. It would explain CLDs.

Re: Account Closures

Anonymous — Thu, 09 Jan 2020 13:18:31 GMT

@Anonymous wrote:
Discover led the charge to get rid of benefits on cards and other issuers followed. Hopefully we don't see the same thing happen with requests for tax transcripts.

Or even more things like scaling back rewards, devaluation of points, etc.

Re: Account Closures

Gmood1 — Thu, 09 Jan 2020 13:20:02 GMT

I don't know @Anonymous. That could be the case, but I doubt it.

I know several people on the inside of the trucking industry( owner operators and brokers). Not one of them says things are great right now.
A lot of them are going under. The economy isn't as great as you've been led to believe.