@Anonymous wrote:
@Anonymous wrote:
...folks who have a LOT of cards, people who've been hitting the CLI buttons too enthusiastically, people who've opened cards (many with generous CL's) but not made any significant use of them...
Yep, this is very true. Every time you receive a CLI, the lending bank has to have a reserve of cash set aside to cover any future charges you make (even if you PIF, they still have to pay the vendor).
On top of this, even a superprime bank like Amex has recently had charge-offs jump up to 1.7% of accounts, which is a significant number if you consider the category of borrowers that Amex aims for.
Synchrony and CapOne recently announced a major jump in charge-offs, so it wouldn't surprise me if Comenity has similar issues with tight reserve capital versus charge-offs. Charge-offs have already been paid to the vendors, so tightening capital reserves means CLD or closing accounts of anyone who isn't a profitable customer.
All banks and lenders have a value for every customer -- some customers are huge profit points, some only cost the bank money. Every new account costs the lender money (issuing new cards, issuing statements, reserving capital for future purchases, etc) -- but also every phone call a customer makes costs the bank money, etc.
So if you're a red line on the bank's profit line, AA isn't a surprise eventually, especially in a tightening market.
That bolded part, to my way of thinking, is the most important part. As you say, everything associated with an account costs the issuer money to service or maintain. That includes having to process CLI's. It would seem to me that it actually ends up costing the issuer more when they have to process a CLI manually due to a call from the accountholder requesting one, whether or not it's approved, and if you have a customer with a history of frequently requesting big CLI's by calling Credit Solutions or whatever that they have to work on, I should think that it raises the profile of that customer when the issuer gets around to looking at who among their customer base is costing them more money than they think is appropriate.
Also, as I've said elsewhere, I sometimes wonder whether the practice of always PIF'ing may not sometimes end up boomeranging on the accountholder in the end. The thing is that credit card issuers make a key share of their profits from the interest they earn on the balances that accountholders carry, particularly if those cards aren't carrying AF's or other regular fees, and if a customer always pays in full, that cuts back a lot on the interest the issuers earn, i.e., the customer's account is less profitable to them.
