Account Closures

Anonymous · ‎01-08-2020

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.

wasCB14 · ‎01-08-2020

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

Personal spend: Amex Gold, Amex Schwab Plat., BofA PR+CCR(x2), Costco
Business use: Amex Bus. Plat., BBP, Lowes Amex AU, CFU AU
Perks: Delta Plat., United Explorer, IHG49, Hyatt, "Old SPG"
Mostly SD: Freedom Flex, Freedom, Arrival
Upgrade/Downgrade games: ED, BCE
SUB chasing: AA Platinum Select

Anonymous · ‎01-08-2020

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.

M_Smart007 · ‎01-08-2020

@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.

Anonymous · ‎01-08-2020

@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.

longtimelurker · ‎01-08-2020

@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.

mikesonthemend · ‎01-08-2020

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.

Living through Darwinism is so much worse than learning about about it in school.

Anonymous · ‎01-08-2020

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.

SouthJamaica · ‎01-08-2020

@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.