topic Re: Credit Limit Decreases Getting Creative?? in Credit Cards

Credit Limit Decreases Getting Creative??

Anonymous — Mon, 28 Sep 2009 21:50:43 GMT

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.

Re: Credit Limit Decreases Getting Creative??

Anonymous — Mon, 28 Sep 2009 22:27:19 GMT

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.

Re: Credit Limit Decreases Getting Creative??

Anonymous — Mon, 28 Sep 2009 22:29:43 GMT

Oops didnt realize it wasnt new news. Forgive the newbie. LOL.

Re: Credit Limit Decreases Getting Creative??

Anonymous — Mon, 28 Sep 2009 22:36:05 GMT

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.

Re: Credit Limit Decreases Getting Creative??

Watchmann — Tue, 29 Sep 2009 03:06:20 GMT

@Anonymous 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.

Re: Credit Limit Decreases Getting Creative??

Anonymous — Tue, 29 Sep 2009 03:18:09 GMT

@Anonymous 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.

Re: Credit Limit Decreases Getting Creative??

Anonymous — Tue, 29 Sep 2009 04:21:40 GMT

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.

Re: Credit Limit Decreases Getting Creative??

CreditAble — Tue, 29 Sep 2009 04:28:00 GMT

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.

Re: Credit Limit Decreases Getting Creative??

Anonymous — Tue, 29 Sep 2009 04:35:46 GMT

Redlining was once a legal practice, too.

Re: Credit Limit Decreases Getting Creative??

Anonymous — Tue, 29 Sep 2009 05:21:31 GMT

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.)

Re: Credit Limit Decreases Getting Creative??

haulingthescoreup — Tue, 29 Sep 2009 12:08:50 GMT

I'm guessing that this story was about the guy in Atlanta who went to the Caribbean on his honeymoon. We had a thread going on Credit in the News eight or nine months ago about his story.

I can see a CCC's eyebrows going up if someone changes from Ruth's Chris to Outback to Sonic (great example!), because that's established practice. But when someone is obviously on a vacation of some sort (card usage in different geographic location), it's absurd to predict default from this. Sure, there are probably honeymooners who go into shopping frenzies, but it's such a unique situation! Purchasing Bob Marley t-shirts and shell necklaces now puts you on AmEx's fecal chart??

And I remember commenting at the time that if AmEx wanted to regard WallyWorld shoppers as high-risk, that was fine, but at that time, they also were listing WalMart as a preferred partner, or whatever they called it, on their bonus mall page, offering 3 points per dollar for shopping there. In fact, WalMart was on the front page when you clicked on "Bonus Mall."

If they consider WalMart shoppers high-risk, they shouldn't post incentives to shop there.

I don't think that's part of their incredibly well-thought-out corporate strategy. It's completely illogical.

And the big problem with the CC legislation is that Congress caved and built in so many delays that it allowed the banks to do some major end-runs. It's like the FCRA not bothering to require that closed accounts report for 10 years.

The US Congress --the finest government money can buy.

Re: Credit Limit Decreases Getting Creative??

Anonymous — Tue, 29 Sep 2009 12:48:02 GMT

@CreditAble wrote:
@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.

+1 (or is it +2 ? I never can figure that out, but I thoroughly agree with each of you!)

Edit to add: Oops...maybe a +3? I missed HTSU's remark:

"And the big problem with the CC legislation is that Congress caved and built in so many delays that it allowed the banks to do some major end-runs. It's like the FCRA not bothering to require that closed accounts report for 10 years. The US Congress --the finest government money can buy."

Priceless, Hauling!

Message Edited by Uborrow-Upay on 09-29-2009 08:48 AM

Re: Credit Limit Decreases Getting Creative??

Watchmann — Tue, 29 Sep 2009 13:53:07 GMT

Too much reading of these forums can make anyone paranoid. My wife and I just got back from a months road trip. I used my AMEX card all over the place for hotels and food in NM, AZ, UT, WY, MT, SD, CO, KS, MO and OK and never though twice about it. Yet, when I had to buy a new set of tires at a WalMart in Abiliene, KS for $550 I pulled out my generic VISA card issued by my CU to pay for them. This card does not report to any of the CA's and I knew it wouldn't raise any alarms. Would have been just as easy to use the AMEX card but thought twice about it. And conversely, when I stayed at higher end hotels in Beaver Creek, CO and at Jenny Lake Lodge in the Tetons I consciously made sure to use the AMEX card.

It is all a bit creepy, and I do not consider myself a paranoid type of individual.

Message Edited by Watchmann on 09-29-2009 08:53 AM

Re: Credit Limit Decreases Getting Creative??

Anonymous — Tue, 29 Sep 2009 13:58:10 GMT

@Watchmann wrote:
Too much reading of these forums can make anyone paranoid. My wife and I just got back from a months road trip. I used my AMEX card all over the place for hotels and food in NM, AZ, UT, WY, MT, SD, CO, KS, MO and OK and never though twice about it. Yet, when I had to buy a new set of tires at a WalMart in Abiliene, KS for $550 I pulled out my generic VISA card issued by my CU to pay for them. This card does not report to any of the CA's and I knew it wouldn't raise any alarms. Would have been just as easy to use the AMEX card but thought twice about it. And conversely, when I stayed at higher end hotels in Beaver Creek, CO and at Jenny Lake Lodge in the Tetons I consciously made sure to use the AMEX card.

It is all a bit creepy, and I do not consider myself a paranoid type of individual.

If a merchant is allowed to accept a particular card why should you have to be concerned about using it for a puchase?

Re: Credit Limit Decreases Getting Creative??

Anonymous — Tue, 29 Sep 2009 14:33:08 GMT

@Anonymous wrote:
If a merchant is allowed to accept a particular card why should you have to be concerned about using it for a puchase?

Why do you park in a driveway, but drive on a parkway?

Re: Credit Limit Decreases Getting Creative??

CreditAble — Tue, 29 Sep 2009 19:51:07 GMT

Uborrow-Upay wrote:

Why do you park in a driveway, but drive on a parkway?

Because it is better than getting high and driving on a highway.

Re: Credit Limit Decreases Getting Creative??

KingAdrock — Tue, 29 Sep 2009 20:57:59 GMT

http://www.nytimes.com/2009/01/31/your-money/credit-and-debit-cards/31money.html?_r=2&hp

Well this article should clear things up, in it Amex claimed that they never discriminated against customers based on where they shopped, but in the same breath said they won't do it anymore.

Re: Credit Limit Decreases Getting Creative??

Anonymous — Tue, 29 Sep 2009 21:26:08 GMT

@CreditAble wrote:
@Anonymous wrote:

Why do you park in a driveway, but drive on a parkway?

Because it is better than getting high and driving on a highway.

CreditAble...LMAO!

Re: Credit Limit Decreases Getting Creative??

Anonymous — Tue, 29 Sep 2009 22:13:42 GMT

George Carlin?

Re: Credit Limit Decreases Getting Creative??

Anonymous — Wed, 30 Sep 2009 09:41:10 GMT

@Anonymous wrote:
George Carlin?