topic Re: Would you prefer instant closure or FR? in Credit Cards

Would you prefer instant closure or FR?

Open123 — Sat, 01 Jun 2013 20:43:40 GMT

Have been reading up on Citi arbitrarily closing accounts for perk abuse with no recourse. Not only has Citi closed the offending account, but also all associating credit and bank accounts. There is no recourse, explanation or discussion.

Do you guys think this would be preferable to the Amex FR?

I have some new found respect for Citi. Best way to handle unprofitable customers (the truly egregious perk abusers) is to simply purge them en masse with absolute finality.

Re: Would you prefer instant closure or FR?

b_seeker — Sat, 01 Jun 2013 21:14:53 GMT

Why do you have respect for Citi? They are handling their witch hunt very poorly. Yes, they are unprofitable customers but really it is Citi's fault for not thinking their uncapped points offer better. Plus, Citi should not be putting stop payments on checks redeemed when the accounts were in good standing, IMO.

That said, I don't know why anyone wouldn't prefer FR over instant closure. FR gives you the chance to refuse and accept the instant closure if you don't like it. Instant closure gives none of us a chance to save our accounts.

Re: Would you prefer instant closure or FR?

parakleet — Sat, 01 Jun 2013 21:29:15 GMT

@b_seeker wrote:
Why do you have respect for Citi? They are handling their witch hunt very poorly. Yes, they are unprofitable customers but really it is Citi's fault for not thinking their uncapped points offer better. Plus, Citi should not be putting stop payments on checks redeemed when the accounts were in good standing, IMO.

That said, I don't know why anyone wouldn't prefer FR over instant closure. FR gives you the chance to refuse and accept the instant closure if you don't like it. Instant closure gives none of us a chance to save our accounts.

Re: Would you prefer instant closure or FR?

Open123 — Sat, 01 Jun 2013 21:44:49 GMT

@b_seeker wrote:
Why do you have respect for Citi? They are handling their witch hunt very poorly...

My "new found" respect for Citi isn't related to their witch hunt or how they're handling it, but rather their conviction in drawing a line in the sand.

I never thought they had the backbone or temerity to institute a purge such as the one we're seeing. My respect stems from their willingness to standfast and not give in to the loud and vociferous vocal minority, because the Citi of old would never have had it in them.

Re: Would you prefer instant closure or FR?

SSA_2013 — Sat, 01 Jun 2013 21:50:52 GMT

I might be lost on this topic...what exactly is Citi considering abusive? Any thread explaining this?

Re: Would you prefer instant closure or FR?

parakleet — Sat, 01 Jun 2013 21:52:51 GMT

@SSA This is something that is discussed in depth on the flyer talk forum, not myfico.

Re: Would you prefer instant closure or FR?

Open123 — Sat, 01 Jun 2013 21:53:39 GMT

@SSA_2013 wrote:
I might be lost on this topic...what exactly is Citi considering abusive? Any thread explaining this?

Using their 5X drugstore promo to buy $500 reloadable Vanilla gift cards, which after loading into a Bluebird account can be used to pay bills, withdrawal cash and issue checks.

Re: Would you prefer instant closure or FR?

b_seeker — Sat, 01 Jun 2013 21:59:07 GMT

@SSA_2013 wrote:
I might be lost on this topic...what exactly is Citi considering abusive? Any thread explaining this?

Check your PMs.

Re: Would you prefer instant closure or FR?

SSA_2013 — Sat, 01 Jun 2013 22:00:10 GMT

@Open123 wrote:
@SSA_2013 wrote:
I might be lost on this topic...what exactly is Citi considering abusive? Any thread explaining this?
Using their 5X drugstore promo to buy $500 reloadable Vanilla gift cards, which after loading into a Bluebird account can be used to pay bills, withdrawal cash and issue checks.

Thanks! I got worried since I have 2 Citi cards. Forward and Dividend. I usually pay all of my charges before the statement cuts or on I'll let a balance report and then pay in full. So I never let them collect any interest. Thus making me unprofitable...although I do use the cards quite a bit for actual purchases not the giftcard type tricks. Should I be worried or let them make some money every few months?

Re: Would you prefer instant closure or FR?

b_seeker — Sat, 01 Jun 2013 22:01:50 GMT

No you shouldn't. Forward and Dividend aren't the current cards in their sights. Dividend is capped anyway.

Re: Would you prefer instant closure or FR?

Anonymous — Sat, 01 Jun 2013 22:05:53 GMT

Well, OP, the thing is, there hasn't been any "churnable" event happened to Amex yet, not like Chase or Citi. Who knows what will happen if you abuse Amex system in the future? And it's unfair when you compare Amex's FR with Chase/Citi 's arbitrary account closure. Because most times Amex doesn't lose anything, they just think your behavior is suspicious. But for the 5X points abuse with Chase/Citi, they clearly know what the abuser's doing, and they don't need any response from the user's at all. So simply kicking the unwelcome customers out is totallay justifiable in my view, though maybe it's not the best choice.(I would give them a second chance if the abuse turn in the extra points)

Re: Would you prefer instant closure or FR?

Anonymous — Sat, 01 Jun 2013 22:36:46 GMT

@SSA_2013 wrote:
@Open123 wrote:
@SSA_2013 wrote:
I might be lost on this topic...what exactly is Citi considering abusive? Any thread explaining this?
Using their 5X drugstore promo to buy $500 reloadable Vanilla gift cards, which after loading into a Bluebird account can be used to pay bills, withdrawal cash and issue checks.
Thanks! I got worried since I have 2 Citi cards. Forward and Dividend. I usually pay all of my charges before the statement cuts or on I'll let a balance report and then pay in full. So I never let them collect any interest. Thus making me unprofitable...although I do use the cards quite a bit for actual purchases not the giftcard type tricks. Should I be worried or let them make some money every few months?

By saying "abuse", we mean people who spend at least $50K on the 5X points category each month. Under that amount.. well, it's just "churning."

Re: Would you prefer instant closure or FR?

Open123 — Sat, 01 Jun 2013 22:09:30 GMT

@SSA_2013 wrote:
@Open123 wrote:
@SSA_2013 wrote:
I might be lost on this topic...what exactly is Citi considering abusive? Any thread explaining this?
Using their 5X drugstore promo to buy $500 reloadable Vanilla gift cards, which after loading into a Bluebird account can be used to pay bills, withdrawal cash and issue checks.
Thanks! I got worried since I have 2 Citi cards. Forward and Dividend. I usually pay all of my charges before the statement cuts or on I'll let a balance report and then pay in full. So I never let them collect any interest. Thus making me unprofitable...although I do use the cards quite a bit for actual purchases not the giftcard type tricks. Should I be worried or let them make some money every few months?

This is not "perk abuse!"

You have nothing to worry about. This kind of "unprofitable customers" Citi welcomes and covets.

Re: Would you prefer instant closure or FR?

b_seeker — Sat, 01 Jun 2013 22:13:16 GMT

@Anonymous wrote:
@SSA_2013 wrote:
@Open123 wrote:
@SSA_2013 wrote:
I might be lost on this topic...what exactly is Citi considering abusive? Any thread explaining this?

By saying "abuse", we mean people who spend at least $50K on the 5X points category each month.

Also keep in mind, not letting them collect interest is not the issue here. Keep PIFing. Interest is not the only way they make profit. They make money from transaction fees. When you redeem a TYP for a cent (or 1.33 cents), the money they pay out is higher than what the make in the transaction fees from the 5x promotions (This is also why many high point categories are capped like the 5% rotating or 6% BCP groceries). That what we mean by unprofitable.

This got off topic fast. . .

Edited for clarity

Re: Would you prefer instant closure or FR?

SSA_2013 — Sat, 01 Jun 2013 22:17:29 GMT

@b_seeker wrote:

Also keep in mind, not letting them collect interest is not the issue here. Keep PIFing. Interest is not the only way they make profit. They make money from transaction fees. When you redeem a TYP for a cent (or 1.33 cents), the money they pay out is higher than what the make in the transaction fees from the 5x promotions (This is also why many high point categories are capped like the 5% rotating or 6% BCP groceries). That what we mean by unprofitable.
This got off topic fast. . .
Edited for clarity

Thanks for the details. I'm surprised they didn't realize this type of practice beforehand. It seems like for some to rack up so many points it has been going on for months..if not longer.

Re: Would you prefer instant closure or FR?

Anonymous — Sat, 01 Jun 2013 22:51:56 GMT

@Open123 wrote:
Have been reading up on Citi arbitrarily closing accounts for perk abuse with no recourse. Not only has Citi closed the offending account, but also all associating credit and bank accounts. There is no recourse, explanation or discussion.

Do you guys think this would be preferable to the Amex FR?

I have some new found respect for Citi. Best way to handle unprofitable customers (the truly egregious perk abusers) is to simply purge them en masse with absolute finality.

I very much prefer FR. At least there's a chance, even though it's slim.

And while I can't exactly say I respect Citi, I like how decisive they're about eliminating those undesirable customers. Those people are pretty much like cancer anyhow and its the main reason for devaluation of rewards / points and implementation of spending caps. That small group of people accounts for most of the reason why most people can't have good things. For some reason they rather much spend their time abusing rewards than to invest the time and energy in their careers. Good riddance, at the very least.

@Anonymous wrote:
Well, OP, the thing is, there hasn't been any "churnable" event happened to Amex yet, not like Chase or Citi. Who knows what will happen if you abuse Amex system in the future? And it's unfair when you compare Amex's FR with Chase/Citi 's arbitrary account closure. Because most times Amex doesn't lose anything, they just think your behavior is suspicious. But for the 5X points abuse with Chase/Citi, they clearly know what the abuser's doing, and they don't need any response from the user's at all. So simply kicking the unwelcome customers out is totallay justifiable in my view, though maybe it's not the best choice.(I would give them a second chance if the abuse turn in the extra points)

There had been several churnable events for Amex.

The uncapped BCP / BCE was one very good example.

And I can totally understand why lenders are shutting down unprofitable customers. Look at it from a personal perspective. Would you buy and hold onto a stock with bleak prospects and has been bleeding money, or would you sell it and recoup whatever you're got?

Not saying you're wrong, but IMO closing those accounts is for good measure. Gives them time to actually cool down and reflect upon their actions.

Those people could always re-apply later on, assuming they're not blacklisted.

Re: Would you prefer instant closure or FR?

Open123 — Sat, 01 Jun 2013 22:51:08 GMT

@Anonymous wrote:
Well, OP, the thing is, there hasn't been any "churnable" event happened to Amex yet, not like Chase or Citi. Who knows what will happen if you abuse Amex system in the future? And it's unfair when you compare Amex's FR with Chase/Citi 's arbitrary account closure. Because most times Amex doesn't lose anything, they just think your behavior is suspicious. But for the 5X points abuse with Chase/Citi, they clearly know what the abuser's doing, and they don't need any response from the user's at all. So simply kicking the unwelcome customers out is totallay justifiable in my view, though maybe it's not the best choice.(I would give them a second chance if the abuse turn in the extra points)

You make a salient point.

The only exception I would make is the BCP's 6% on groceries. While this may not have been as widely abused as Ink's 5X or Citi's 5X, rather than closing accounts and confiscating rewards earned, Amex changed the structure capping it at $6K.

While there have been some who were FR'ed for excessive supermarket GC spending, it appears to me Amex handled their oversight in a much less draconian way than either Citi or Chase with their oversights, namely the AARP, Ink 5X and Citi's 5X,

Re: Would you prefer instant closure or FR?

dabrian — Sat, 01 Jun 2013 23:07:21 GMT

Could someone explain to me what is so bad about an FR? You're only sending tax records amirite?

Re: Would you prefer instant closure or FR?

Anonymous — Sat, 01 Jun 2013 23:21:22 GMT

@dabrian wrote:
Could someone explain to me what is so bad about an FR? You're only sending tax records amirite?

In summary, yea.

However, those records are extremely detailed, so some people do not like divulging all that info.

And there's also another group of people who fudged their apps so they can't show the real docs because that is essentially as good as them confessing they committed fraud.

Re: Would you prefer instant closure or FR?

Anonymous — Sat, 01 Jun 2013 23:20:35 GMT

@Open123 wrote:
@Anonymous wrote:
Well, OP, the thing is, there hasn't been any "churnable" event happened to Amex yet, not like Chase or Citi. Who knows what will happen if you abuse Amex system in the future? And it's unfair when you compare Amex's FR with Chase/Citi 's arbitrary account closure. Because most times Amex doesn't lose anything, they just think your behavior is suspicious. But for the 5X points abuse with Chase/Citi, they clearly know what the abuser's doing, and they don't need any response from the user's at all. So simply kicking the unwelcome customers out is totallay justifiable in my view, though maybe it's not the best choice.(I would give them a second chance if the abuse turn in the extra points)
You make a salient point.

The only exception I would make is the BCP's 6% on groceries. While this may not have been as widely abused as Ink's 5X or Citi's 5X, rather than closing accounts and confiscating rewards earned, Amex changed the structure capping it at $6K.

While there have been some who were FR'ed for excessive supermarket GC spending, it appears to me Amex handled their oversight in a much less draconian way than either Citi or Chase with their oversights, namely the AARP, Ink 5X and Citi's 5X,

I think this is really the major complaint of those shut down by Citi. The whole thing could be avoided by having a cap on the 5x earnings, something Citi already does on any cards. And, in some cases, purchases as small as $1000 of gift cards over 2 months caused a shutdown of all accounts: in this case the person had a large TY balance built up in 2009, wanted to cancel her card as it wasn't used, got a 5x retention bonus, and bought some gift cards, perfectly normal at graduation time.

There may have been "abuse" but a) there really isn't a good definition of that, and b) it really is Citi's fault, as with a simple cap they could have made the rules clear and avoided any trouble. It's not people spending $30K a month that are the only ones impacted (and various FTers would say "And even if it was, where is that prohibited")

And as for the statement that these are the cancer reducing rewards for all, well, I disagree. To others spending less, anyone's use of a lamented benefit was an abuse. It really is up to the issuer to control possible loss by capping, without that no-one knows what is allowed (e.g. gift card purchase above).

And of course, Citi doesn't close for "Perk Abuse", it is security related. Yes, right!