Credit Cards that are closing accounts or decreasing limits for no reason

[user979797]

These last few weeks I have sadly seen a few posts about banks closing or decreasing credit limits during our time of need in a true crisis. I would hope that all banks and credit unions could and would stand with it's customers at a time of crisis and emergency. Some are doing this and some aren't.

I have also seen a few posts of customers noticing which credit cards are getting slashed or cancelled for no reason and which aren't (at least so far) and this really struck a chord with me. I personally will be watching to see which ones help or hurt customers during a crisis. I call cancelling a customers credit card or even reduing their limit when they have been a loyal interest paying card swipe fee getting customer NOT RIGHT. It's even worse when the customer has to find out by logging into online banking. Not so much as a phone call to talk about it or see if that is downright going to hurt the customer during a pandemic? In my opinoin this is NOT RIGHT.

I know some will agree and some will disagree. That is OK we are all in this together no matter what we think I just had to post this because it pesonally makes me annoyed to see "big bullies" on the playground during a crisis taking actions that can hurt a persons financial health even more by taking away credit lines that we prove responsible enough to obtain to begin with.

I just feel any customer who has always paid on time and never exceeded their credit limit and has always shown good faith in the past should not be punished during a crisis for whatever reason. I personally will remember what banks did this and in the future I will not be banking in any form with these institutions.

Thanks to all of you who are posting your experiences and please keep posting on the boards about these banks and credit unions that take these actions.

Sorry to all of you who have experienced a credit limit decrease or a closed credit card account during this time of uncertainty.  Hang in there

[CreditCrusader]

You know, I came into this issue breathing fire on Synchrony for their persistent poor treatment of card holders. After all, they purge accounts about every other year with ZERO notice to their customers.

But I have to tell you, I'm beginning to think that this is almost an expected thing among many credit card issuers...and in particular, store credit card backers are the chief offenders.

Comenity has a history of screwing around with both limits and accounts. GE Money/Capital also used to do it before they handed the reins to Synchrony.

Regarding non-store cards, AMEX is legendary relative to messing with accounts and limits subsequent to pop FRs. Discover is consistently inconsistent. Trying to get a read on how both of those cards do business is like trying to get cats to march in a parade.

In my opinion subsequent to three decades in the credit game, sticking to strong credit union cards and those offered by banks with whom you have an established savings/checking/mortgage relationship built is the best way to avoid this sort of headache. True, it's tough to get the $20,000-$50,000 limits that some have bragged about relative to store cards, but what good are those limits if the issuers simply yank the rug out on a moment's notice? Using those cards to keep UTIL lower is all well and good...until the limits no longer perform their task and your credit score shoots up like a rocket. Better to just shoot for the highest limits possible with more stable cards as a long run strategy.

Just one man's opinion, not for everyone...

[sarge12]

It is best to keep in mind that during this virus, financial institutions are getting nervous. They and their customers are all unsure how all this will play out. Seeing all these buisinesses shut downleads them to fear a massive number of defaults. That is especially true for some of these lower tier card issuers, who have a huge percentage of their customers with lower credit scores. During such times they look to lower their exposure, especially to those most likely to default. credit cards are not a right guaranteed by the Constitution. It often has nothing to do with the person whose card is closed, just the strength of the economy and seeing so many becoming unemployed. I am sure they have actuarial charts that show how higher unemployment leads to higher defaults, and can actually predict the number of defaults that will happen. I am 61 years old, and I have never seen all these businesses closing for any reason for an extended length of time. That creates great uncertanty, and financial markets hate uncertanty. They do not know if or when the restrictions will be lifted, nor do they know if an attempted ramping back up of business might lead to the flattened curve going up again. Like almost every business, great uncertanty makes cash king, and they start liquifying assets.

[CreditCrusader]

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@sarge12 wrote:

It is best to keep in mind that during this virus, financial institutions are getting nervous. They and their customers are all unsure how all this will play out. Seeing all these buisinesses shut downleads them to fear a massive number of defaults. That is especially true for some of these lower tier card issuers, who have a huge percentage of their customers with lower credit scores. During such times they look to lower their exposure, especially to those most likely to default. credit cards are not a right guaranteed by the Constitution. It often has nothing to do with the person whose card is closed, just the strength of the economy and seeing so many becoming unemployed. I am sure they have actuarial charts that show how higher unemployment leads to higher defaults, and can actually predict the number of defaults that will happen. I am 61 years old, and I have never seen all these businesses closing for any reason for an extended length of time. That creates great uncertanty, and financial markets hate uncertanty. They do not know if or when the restrictions will be lifted, nor do they know if an attempted ramping back up of business might lead to the flattened curve going up again. Like almost every business, great uncertanty makes cash king, and they start liquifying assets.

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The problem with that reasoning is the nature of the closures.

Synchrony isn't closing accounts with $300 limits for borrowers with 640 FICOs. They're closing accounts of prime borrowers with huge CLs, regardless of UTIL or FICO.

[kdm31091]

Banks do not close accounts or decrease limits for "no reason". We may not agree with, like, or understand the reason, but it's not randomly pulled out of a hat.

Banks are not going to call you to discuss things, or to warn you, because if they did so, you could just rack up a bunch more charges and not pay them out of anger, to "stick it" to the bank. So they're not going to warn you about these things.

Some banks are more prone to doing it than others but almost every bank we discuss around here can and does perform account closures/limit decreases. Synchrony is just a current example. We've seen it from Amex, Comenity, Chase, Citi, BoA, etc, the list goes on. If you choose not to do business with any bank who may take your limit away, well, you won't have many if any choices! A CU is probably your best bet in that situation and even then nothing is guaranteed.

[user979797]

By taking away credit lines that we prove responsible enough to obtain to begin with they are not just protecting themselves; they want us to pay them interest and use their cards to make them money but during a crisis they get to cancel because they are afraid? They aren't brokers they are credit card grantors. Closing accounts with long-term loyal customers who have done nothing wrong and have a good credit history both through reports and the bank itself does not in anyway protect them during this crisis; it just makes them feel more protected and it screws the customer who may depend on that well earned credit line.

I could understand if they looked at credit reports and noticed they were starting to fail with other accounts (THIS would be protection) but this is not what people are posting. I am talking about closing accounts on loyal honest customers who have done nothing but pay on time and have not given any reason to indicate they will not continue to do so.

[user979797]

"Banks do not close accounts or decrease limits for "no reason". We may not agree with, like, or understand the reason, but it's not randomly pulled out of a hat.

Banks are not going to call you to discuss things, or to warn you, because if they did so, you could just rack up a bunch more charges and not pay them out of anger, to "stick it" to the bank. So they're not going to warn you about these things.

Some banks are more prone to doing it than others but almost every bank we discuss around here can and does perform account closures/limit decreases. Synchrony is just a current example. We've seen it from Amex, Comenity, Chase, Citi, BoA, etc, the list goes on. If you choose not to do business with any bank who may take your limit away, well, you won't have many if any choices! A CU is probably your best bet in that situation and even then nothing is guaranteed."

Your right. They do have a right to close accounts for their reasons. And your also right that several banks have done this before and will continue to do so. But banks that make a habit out of it, I can choose not to bank with them. There are several banks besides Citi and Synchrony and Amex out there that do not practice this so easily and I normally wouldn't complain and just say it's part of it but during a rare emergency pandemic that's when I care and it matters and it's worth speaking out

[user979797]

"Banks do not close accounts or decrease limits for "no reason". We may not agree with, like, or understand the reason, but it's not randomly pulled out of a hat.

Banks are not going to call you to discuss things, or to warn you, because if they did so, you could just rack up a bunch more charges and not pay them out of anger, to "stick it" to the bank. So they're not going to warn you about these things.

Some banks are more prone to doing it than others but almost every bank we discuss around here can and does perform account closures/limit decreases. Synchrony is just a current example. We've seen it from Amex, Comenity, Chase, Citi, BoA, etc, the list goes on. If you choose not to do business with any bank who may take your limit away, well, you won't have many if any choices! A CU is probably your best bet in that situation and even then nothing is guaranteed."

Your right. They do have a right to close accounts for their reasons. And your also right that several banks have done this before and will continue to do so. But banks that make a habit out of it, I can choose not to bank with them. There are several banks besides Citi and Synchrony and Amex out there that do not practice this so easily and I normally wouldn't complain and just say it's part of it but during a rare emergency pandemic that's when I care and it matters and it's worth speaking out

[Anonymous]

All of this simply reinforces the fact that banking is a business, it's not personal. By and large, we are numbers to them. They don't dislike any of us, they just use their algorithms to determine what they see to be their best interests and act accordingly. Reverse the situation and we would do the same if it was our money that others were using. It IS their money we are using and that means they call the shots. We don't have to like it. Does it suck? Sure, but can we really blame them for protecting themselves? No. It's the nature of credit, for better or worse.

[CreditCrusader]

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@Anonymous wrote:

All of this simply reinforces the fact that banking is a business, it's not personal. By and large, we are numbers to them. They don't dislike any of us, they just use their algorithms to determine what they see to be their best interests and act accordingly. Reverse the situation and we would do the same if it was our money that others were using. It IS their money we are using and that means they call the shots. We don't have to like it. Does it suck? Sure, but can we really blame them for protecting themselves? No. It's the nature of credit, for better or worse.

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Correction: The easing they are receiving through the Fed is not THEIR money, but rather created...and we will pay both interest and inflation in order for them to have it.

Due respect, I don't really see any value in coddling their "interests" when they treat us like numbers...and not all lenders see us that way, or else recon wouldn't work and credit unions wouldn't take chances on PEOPLE instead of numbers.

[kdm31091]

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@CreditCrusader wrote:

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and not all lenders see us that way, or else recon wouldn't work and credit unions wouldn't take chances on PEOPLE instead of numbers.

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There's actually been a trend away from recon and towards automated decisions with a variety of banks, IMO because they don't want human emotion involved in lending decisions (and to save money on paying people to manually review apps)