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

[Anonymous]

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@Anonymous wrote:

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@adelphi_sky wrote:

I would like a law that says if I am in good standing with a creditor, they can't close my account or reduce my credit line without my consent. Right now, they can adversly affect our credit profile and we have no power against it. And good standing can mean having at least a 36 month hstory with the bank with no late payments. At least that gives good long-standing customers some protections. 

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And in return you will have to keep the card open for .... years and spend XXXXX a year.   That's only fair

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You beat me to the punch. I posted before reading yours. Basically said what you said.

[Anonymous]

Since I am a big hater of AA, I try to do what I can to minimize it. I'm not sure its effective, but no AA in 19 years with running up large balances in bad economic times, maybe something I'm doing is helping. 

I'd say diversify, diversify, diversify. PIF, keep cards open for years and use them, never pay late. Go lightly on the "junk" lenders (Synchrony, Comenity, etc).

Having said that, I'll probably get a CLD tomorrow lol.

Some people don't mind AA in tough times, and will have 4 cards with one issuer. Not me. But that's fine for others as it's worth it to them in good times even if AA comes in bad times, or even in good times. 

[Remedios]

Comenity and Synchrony are not the junk lenders. For those who actually use their cards, they offer some pretty good deals. 

Comenity can be a bit in hyperactive side when excessive credit seeking is present, or balances with them or other lenders are stagnant or increasing. 

If you hang out in RYC, you will notice hard to find someone who didnt burn them. Same goes for Synchrony. I'd be short fussed, too. 

Synchrony, well can we really blame them for not wanting to provide up to 100,000.00 simply for utilization padding while cards go largely unused? 

If a lender asked to borrow money from you, and gave you nothing in return, would you accept that deal? 

People go overboard with Synch, despite many stories about how Synch responds at times. This is nothing new, it's happened before and it will happen again.

Also, as soon as situation calms down, people are going to call and push buttons, ensuring cycle starts all over again. 

Another lesson from RYC, people default on $300.00 secured cards. What do we think happens when $100,000.00 is available.

I'm not defending them, nor am I attacking anyone, but to only go with emotional reactions while ignoring everything that preceded cards being closed leads to repeat performances. 

[Anonymous]

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@Remedios wrote:

Comenity and Synchrony are not the junk lenders. For those who actually use their cards, they offer some pretty good deals. 

Comenity can be a bit in hyperactive side when excessive credit seeking is present, or balances with them or other lenders are stagnant or increasing. 

If you hang out in RYC, you will notice hard to find someone who didnt burn them. Same goes for Synchrony. I'd be short fussed, too. 

Synchrony, well can we really blame them for not wanting to provide up to 100,000.00 simply for utilization padding while cards go largely unused? 

If a lender asked to borrow money from you, and gave you nothing in return, would you accept that deal? 

People go overboard with Synch, despite many stories about how Synch responds at times. This is nothing new, it's happened before and it will happen again.

Also, as soon as situation calms down, people are going to call and push buttons, ensuring cycle starts all over again. 

Another lesson from RYC, people default on $300.00 secured cards. What do we think happens when $100,000.00 is available.

I'm not defending them, nor am I attacking anyone, but to only go with emotional reactions while ignoring everything that preceded cards being closed leads to repeat performances. 

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Retail cards tend to offer bad terms (fed rate is 0%, but my Lowe's APR is at a rock bottom 26%!), they don't have account alerts, many times are offered by not-so-well-known banks (I never heard of Synchrony until I got the Lowe's card, and Comenity until I came here), and some scoring models take too many of them on a profile as a negative and even a risk factor. 

You can't beat 5% at Lowe's. They also offer short term reduced rates on revolving balances, which can be great for people. Those are the good things. But they are limited in use and don't provide many perks as standard cards. Too many of them I don't think are great for the profile.

[CreditCrusader]

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@Remedios wrote:

Comenity and Synchrony are not the junk lenders. For those who actually use their cards, they offer some pretty good deals. 

Comenity can be a bit in hyperactive side when excessive credit seeking is present, or balances with them or other lenders are stagnant or increasing. 

If you hang out in RYC, you will notice hard to find someone who didnt burn them. Same goes for Synchrony. I'd be short fussed, too. 

Synchrony, well can we really blame them for not wanting to provide up to 100,000.00 simply for utilization padding while cards go largely unused? 

If a lender asked to borrow money from you, and gave you nothing in return, would you accept that deal? 

People go overboard with Synch, despite many stories about how Synch responds at times. This is nothing new, it's happened before and it will happen again.

Also, as soon as situation calms down, people are going to call and push buttons, ensuring cycle starts all over again. 

Another lesson from RYC, people default on $300.00 secured cards. What do we think happens when $100,000.00 is available.

I'm not defending them, nor am I attacking anyone, but to only go with emotional reactions while ignoring everything that preceded cards being closed leads to repeat performances. 

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I'm starting to swing to this line of thinking very quickly after initially being very hard on Synchrony.

At first, I thought that Synchrony was just dropping the hammer. But now, I wonder whether some folks have been chosen because their overall credit file looks a lot like usage on non-Synchrony cards...and the Synchrony cards exist to serve largely as UTIL balancers.

Frankly, if I were a lender, I'm not sure I'd like being used in that fashion while having risk hanging out there and no appreciable interest being paid. I'm not judging those who have those store cards, but I can see that side of it.

[Anonymous]

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@CreditCrusader wrote:

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@Remedios wrote:

Comenity and Synchrony are not the junk lenders. For those who actually use their cards, they offer some pretty good deals. 

Comenity can be a bit in hyperactive side when excessive credit seeking is present, or balances with them or other lenders are stagnant or increasing. 

If you hang out in RYC, you will notice hard to find someone who didnt burn them. Same goes for Synchrony. I'd be short fussed, too. 

Synchrony, well can we really blame them for not wanting to provide up to 100,000.00 simply for utilization padding while cards go largely unused? 

If a lender asked to borrow money from you, and gave you nothing in return, would you accept that deal? 

People go overboard with Synch, despite many stories about how Synch responds at times. This is nothing new, it's happened before and it will happen again.

Also, as soon as situation calms down, people are going to call and push buttons, ensuring cycle starts all over again. 

Another lesson from RYC, people default on $300.00 secured cards. What do we think happens when $100,000.00 is available.

I'm not defending them, nor am I attacking anyone, but to only go with emotional reactions while ignoring everything that preceded cards being closed leads to repeat performances. 

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I'm starting to swing to this line of thinking very quickly after initially being very hard on Synchrony.

At first, I thought that Synchrony was just dropping the hammer. But now, I wonder whether some folks have been chosen because their overall credit file looks a lot like usage on non-Synchrony cards...and the Synchrony cards exist to serve largely as UTIL balancers.

Frankly, if I were a lender, I'm not sure I'd like being used in that fashion while having risk hanging out there and no appreciable interest being paid. I'm not judging those who have those store cards, but I can see that side of it.

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That could be the case.  I'm not mindful of padding for utilization, but I guess people are doing it and they are on to it.

[sarge12]

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@Anonymous wrote:

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@Anonymous wrote:

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@adelphi_sky wrote:

I would like a law that says if I am in good standing with a creditor, they can't close my account or reduce my credit line without my consent. Right now, they can adversly affect our credit profile and we have no power against it. And good standing can mean having at least a 36 month hstory with the bank with no late payments. At least that gives good long-standing customers some protections. 

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And in return you will have to keep the card open for .... years and spend XXXXX a year.   That's only fair

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You beat me to the punch. I posted before reading yours. Basically said what you said.

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You can bet that if there were laws to prevent credit card issuers from closing cards or decreasing limits, we would not have these high limits in the first place. They give these high limits with the knowledge that if the economy goes bad, they can and will reduce their exposure to remain solvent. In cases like this virus we went from nearly no unemployment to high unemployment nearly overnight. When massive numbers of people become unemployed people start using credit cards and paying the minimum. The issuers in turn, for a while have more funds being used to cover these charges, and people paying them less in payments. Nearly any business will look to mitigate risk when in times that the business is spending more than they are making. Most of the time issuers are receiving more in payments and fees than the spend out on the charges, but a massive change to the economy like this virus has caused results in that not being the case. The closures and lowering of limits are likely based on the change in the cardholders habits. Many that were trying to pay down debt, were suddenly taking on debt like never before, so issuers respond by tightening their lending. The less the Government gets involved in lenders credit extension decisions, the better. The free market works if not impeded by Government involvement. JMHO!

[Anonymous]

If credit score is in any way attached to SL (and there is plenty of data to back that up) we would know that borrowers with higher scores, by virtue of the entire scoring system itself, have an indicator of a lower risk of default. The higher risk of default on lower SL customers and the lower risk of default with higher SL customers should average out if the actuaries are doing their job right. Because the issuing bank's risk tolerance is a single value. The easiest way to hit that target and not over- or under-expose the creditor is to make sure that "factor" is consistent across every approval. High risk / low SL, low risk / high SL. 

In a by-the-book definition, "subprime" is ANY rate above the prime rate. So while this very emotive term gets thrown around often in the media,  we each have a very different image of what that looks like to us as a consumer. It doesn't really "help" their image backing so many store cards applied for at point-of-sale. Store cards are notorious for offering a big, one-time discount for applying, and no rewards or promotional financing thereafter. No wonder they get little usage. They don't offer much in the way of ONGOING incentives for cardholders to make ONGOING transactions with their card. 

Just read this, straight from SYNC's website: https://www.synchrony.com/for-consumers.html

Chase or AmEx would never word their pitch to consumers like this. They're more lifestyle-oriented and image-conscious, and thusly viewed in higher regard by consumers than SYNC and Comenity. Simple. 

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[Citylights18]

The typical store card is offered by a big box retailer.

Usually someone opens a store card to get 0% APR financing on a large purchase at a big box store. Something that is 1k-4k they see the advantage of making a minimum purchase rather than paying for it outright because its a huge hit to the checking account.

So I'm not seeing where its outright robbery to get a store card but I will say a lot of my store cards were designed to be paid and closed. I even had a synchrony JC Penny that I got when getting some houseware closed after limited usage. They aren't designed for what people are trying to do around here, namely grow monster limits.

Also with the high APR on some of these store cards, paying high interest on a small balance for a limited amount of time is not that bad of a tradeoff in some situations. I've done it when I've needed to rush out and buy suits. Then when the tax return rolls in knock it out. Just don't carry a large balance like that.

[ballysdad]

exactly this! Discover just lowered my CL 10%. I always pay the day my bill is due and have never missed a payment with them. Will this have a trickle down effect? All emotions aside I know I am just another number to them and now they are just another number to me in the future.