Chase closed all 11 of my credit cards with them!!

Anonymous · ‎07-01-2020

Greetings,

I recently had 11 Chase credit cards closed. Seven were personal, and four were business cards. The combined lines were 186k. The balances on them were 211k. My overall utilization was 55% and overall credit lines were 474k. The credit scores at the time were around 700 each, and the average age of accounts was 10 years. I had 22 total accounts. I was paying close to $3k in interest monthly. A few days before the closures, I added four authorized users on three of the cards. I assume this may have triggered it.

In summary:

-My total open accounts went from 22 to 11.

-My average age of accounts went from 10 years to 6 years.

In total, I have spent over $15,000,000 on Chase cards in the last 10 years.

These are my questions:

What would be the reasons why an institution such as Chase would take would such drastic measures without first discussing any possible issues directly with the customer?
Are there any state or federal regulations that banks need to follow when terminating relationships?
If banks do use rules and guidelines, are these rules and guidelines internal or can they be known by the public?
If the rules are internal, is there any state or federal regulatory agency that reviews the rules to make sure they are legal?
If there is, how can the public know that the government agencies are actually doing their job?
Has any of you had something similar happen to you?

Any answers, tips, or comments are greatly appreciated.

M_Smart007 · ‎07-01-2020

Hi @Anonymous Welcome to the forums!

Sorry for your closeures

I am too tired to answer, But I am sure you will get MANY reply's.

Anonymous · ‎07-01-2020

Hi @M_Smart007 ,

Thanks!!

Brian_Earl_Spilner · ‎07-01-2020

Lenders have the right to close accounts whenever and for whatever reason without any prior notification. You can try reaching out to them to get to the bottom of it. If that doesn't work, you can try filing a complaint with the CFPB.

K-in-Boston · ‎07-01-2020

@Anonymous wrote:

These are my questions:

What would be the reasons why an institution such as Chase would take would such drastic measures without first discussing any possible issues directly with the customer?

Are there any state or federal regulations that banks need to follow when terminating relationships?

If banks do use rules and guidelines, are these rules and guidelines internal or can they be known by the public?

If the rules are internal, is there any state or federal regulatory agency that reviews the rules to make sure they are legal?

If there is, how can the public know that the government agencies are actually doing their job?

Has any of you had something similar happen to you?

Any answers, tips, or comments are greatly appreciated.

First 1. You are an extremely high risk customer by using over 113% of your available credit with them while having very high overall utilization, carrying the balances, and possibly aggravated by adding that many AUs.

Second 1. No. Your cardmember agreements state that they can close the account(s) for any reason at any time.

Third 1. They can be known by the public, if the public reads the agreements they enter into.

Fourth 1. CFPB.

Fifth 1. Not touching that one.

Sixth 1. I had a card closed for non-use once. Had balance chasing and rate jacking during the last recession.

Anonymous · ‎07-01-2020

First 1. You are an extremely high risk customer by using over 113% of your available credit with them while having very high overall utilization, carrying the balances, and possibly aggravated by adding that many AUs.

Thanks for the reply @K-in-Boston.

I always thought the risk of a customer was determined by the average credit scores from all three bureaus. For them to assess risk using very fine parameters such as utilization on a per-card basis, or number of authorized users per card seems a bit too finicky. If they decide the limits, allow you to go over the limits, even encourage you to add authorized users, why them, would those be logical reasons to terminate a successful relationship?

In 2007, I had an AmEx Gold with a 20k limit which had a 3k balance. The limit was then reduced to 3k. When I called to ask them why, they said it was related to the recession. About a week later, the account got closed. Their reason was that the utilization was very high and it put me in a high-risk category. So pretty much, banks have the power to change the risk categories of their customers, by adjusting their credit lines. For pay-in-full customers who are up to date with the latest credit scoring formulas, maybe they can't do much damage. However, why should they have the power to do the greatest damage to the least fortunate and least knowledgable among us? How is it, that they have the power to change their most desperate customers' creditworthiness on a whim?

Anonymous · ‎07-01-2020

Because those most desperate customers are their biggest risk and those who don't educate themselves on credit usage maintain that ignorance at their own risk. Banks will extend lines of credit but they expect repayment fairly promptly. They're not giving a hundred grand to a user intending for that user to carry over a hundred grand for extended periods of time. Amex, for example, will allowing spend above the limit but their expectation is that any amount above the limit will be repaid in addition to minimums due at the next due date. Your angle on this appears to be that the loans offered in the form of a credit card are open-ended in length outside of minimum required payments. In reality, a bank wants its money, and the more you spend, the more they'll be eyeballing you and expecting large repayments.This isn't meant to come across as harsh, but rather as being real. If I loaned somebody $120k, I'm gonna want to see some big repayments in a prompt time frame, not potentially floated along for months. My guess is exactly as K was saying - any creditor will allow you to spend but they want to see that balance coming down at a good pace, or they're going to get nervous. Chase decided that you using over 113% of your limits, coupled with very high aggregate usage, made you too much of a risk so they mitigated it. Your factors even in a good economy might well have led them to do so - in this economy it was almost a certainty. They're in business to make money, and will use many in-depth parameters to ascertain whether they're at risk to lose money. Per-card usage, aggregate usage, defaults in the past (even if unrelated to themselves), secondary reporting bureau information, you name it. If there's a number available, they'll crunch it.

Anonymous · ‎07-01-2020

I understand what you are saying, however, I think there would have been a much better way to handle the issue. If a bank lends a few hundred thousand in credit, and they are having second thoughts, why not simply call the customer, and discuss new terms. For example, if they told me to pay off the accounts in full, I would have done so. If they told me I can use the accounts as is as long as I pay in full each month, I would have complied. Even if they lowered all the lines to 1k each, I would have been upset, but it would have been a better option compared to what they did. By them closing the accounts, they interfere with my creditworthiness. They lower the average age of accounts, which removes points that I believe I deserve. They reduce the perception that I properly managed those accounts for two decades without any issues. They increase the likelihood of other banks following suit simply because that history would no longer be pertinent. There could even be automatic algorithms in place by the other banks that can mimic the behavior of Chase with the idea that, "If Chase shut you down, we don't know why, but they must have had a good reason to, so we will too." It is simply either, lack of consideration by banks, or willful intent to hinder one's ability to move up in the credit ranks.

Revelate · ‎07-01-2020

@Anonymous wrote:

First 1. You are an extremely high risk customer by using over 113% of your available credit with them while having very high overall utilization, carrying the balances, and possibly aggravated by adding that many AUs.
Thanks for the reply @K-in-Boston.

I always thought the risk of a customer was determined by the average credit scores from all three bureaus. For them to assess risk using very fine parameters such as utilization on a per-card basis, or number of authorized users per card seems a bit too finicky. If they decide the limits, allow you to go over the limits, even encourage you to add authorized users, why them, would those be logical reasons to terminate a successful relationship?

In 2007, I had an AmEx Gold with a 20k limit which had a 3k balance. The limit was then reduced to 3k. When I called to ask them why, they said it was related to the recession. About a week later, the account got closed. Their reason was that the utilization was very high and it put me in a high-risk category. So pretty much, banks have the power to change the risk categories of their customers, by adjusting their credit lines. For pay-in-full customers who are up to date with the latest credit scoring formulas, maybe they can't do much damage. However, why should they have the power to do the greatest damage to the least fortunate and least knowledgable among us? How is it, that they have the power to change their most desperate customers' creditworthiness on a whim?

Unfortunately just because you can do a thing, doesn't mean you should. Add credit card advances to that list of things probably shouldn't be touching as another example.

This is an especially wonky time, and lenders are apparently scrutenizing everything more closely. That plus a marked change in your behavior (adding the AU's, which from a banks perspective when you're already highly leveraged means you're potentially going to be further leveraged, which is additional risk etc. ad naseum) is a recipe for getting whacked.

FICO scores arguably determine credit worthiness, but they are more foot in the door than long term account management and Chase in particular stopped using FICO for their credit scoring years ago for most of their products... there's plusses and minuses to that approach, clearly they liked you in the past with those credit lines, but they got spooked.

As mentioned previously, call them. You have had the relationship for a decade, ask what went wrong, don't be indignant, and promise to do better and could you please have the accounts back (even if at reduced lines or having to close some of them). Ultimately what K said was right, and banks for all that they like the interest they don't want to be stuck holding the bag and yours is a pretty substantial one.

Minor credit scoring point though, other than the loss of the tradelines from a revolving utilization perspective you wouldn't have even seen any change on your FICO scores: average age of accounts which you reference is both open and closed accounts, and moving a tradeline from open to closed doesn't change that in the slightest. There isn't much leg to stand on when it comes to credit being damaged for you or anyone else from this, yes banks are not our friends, but they also didn't have to lend us that money in the first place either and at some level when borrowing, the one with the money makes the rules and in this case they're spelled out in the T&C and it was totally within scope what they did.

Revelate · ‎07-01-2020

@Anonymous wrote:
I understand what you are saying, however, I think there would have been a much better way to handle the issue. If a bank lends a few hundred thousand in credit, and they are having second thoughts, why not simply call the customer, and discuss new terms. For example, if they told me to pay off the accounts in full, I would have done so. If they told me I can use the accounts as is as long as I pay in full each month, I would have complied. Even if they lowered all the lines to 1k each, I would have been upset, but it would have been a better option compared to what they did. By them closing the accounts, they interfere with my creditworthiness. They lower the average age of accounts, which removes points that I believe I deserve. They reduce the perception that I properly managed those accounts for two decades without any issues. They increase the likelihood of other banks following suit simply because that history would no longer be pertinent. There could even be automatic algorithms in place by the other banks that can mimic the behavior of Chase with the idea that, "If Chase shut you down, we don't know why, but they must have had a good reason to, so we will too." It is simply either, lack of consideration by banks, or willful intent to hinder one's ability to move up in the credit ranks.

I would agree there should be a better way, but they also can't change the T&C on a whim and if the mandate to pay in full isn't there (it's not) they can't arbitrarily tell you that you have to comply with it.

Then you would've been able to go get the lawyer, and you would've won that lawsuit. You can offer to do that, but they can't mandate it otherwise they violate the terms: T&C go both ways.