I'd have to look at the thread you're talking about to know for sure, but I've heard about the AARP card and that seems to be a specific issue regarding a single, specific Chase card using a specific pattern of behavior designed to either manipulate the system or otherwise go well beyond what the intent of the program was meant for with is causing Chase net losses on those accounts and therefore, unsurprisingly, they are closing them down.

Broadly applying those examples--if they are legitimate and true--to all Chase cards and all patterns of spending would be... erroneous at best.

You have this exactly 180 degrees wrong. This is about banks closing out busines cards which appear to be for consumer purposes.

The issue is that Dodd-Frank creates a series of additional rights for consumers which can be extremely valuable in certain types of disputes. Business cards do not carry those protections and CC issuers are concerned that they will be held liable for their failure to properly police the business cards.

This is not a t&c issue, but rather an outright bank fraud matter. A consumer applies for a business card, representing that s/he is a business when s/he is not. It's not worth the potential liability so the bank cancels the fake business card and ends the customer relationship overall.

Easiest signals are that a business is using an individual's Social #, not an EIN; doesn't have articles of incorporation or partnership and not even an "assumed name" certificate or local business license in a jurisdiction which requires them.

I have also seen speculation (total speculation but makes logical sense to me) that in rolling out the 5% cashback card, Chase intentionally did it as an AARP one, as it expected it to be used by older applicants with more predictable levels of spending and who are less likely to engage in various rewards maximization strategies. AARP, of course, is not limited to people of any particular age, so, once word of the card got out, people of various ages jumped on it and then did whatever they could to maximize the promo.

I don't necessarily blame Chase for pulling the plug on this and other programs, although it also seems disingenuous to roll out enticing and unlimited promotions and to then start blaming and punishing people who maximize them for Chase's miscalculation.

Why do you say that? If you are causing Chase losses by maximizing good promotions, whether through sign-up bonuses or ongoing rewards, then it would follow that you would be at risk. The more you maximize your rewards payouts, the more losses you would seem to be causing, which means that the likelihood of getting hit goes up, doesn't it?

If, on the other hand, you are putting your charges on a no-rewards or a low-rewards credit card, not paying off your balances in full every month and subsequently paying interest on them, then Chase (and every other issuer, for that matter) probably loves you to death. Since we are having this discussion, then you are presumably not doing something like that though.

I agree. However, you have the post I was responding to exactly 180 degrees wrong.

Uh, by your logic, there would be no reason for Chase to have rewards cards, because they only take losses on them and only want clients on no rewards cards that carry balances.

Yes. No rewards customers that carry balances are their most profitable clients by a long shot. As long as those balances eventually get paid, which is often less certain because those customers are often higher risk.

However, it seems clear they do want other types of customers, even if it means giving them rewards (that's the trade off for Chase--they are lower risk customers for Chase, though they may bring in smaller profits) and even if they pay off their monthly balance each month (which is the category I fall into). Or...Chase would have a whole lot less customers.

The customers that are at risk are the ones who fall into a very, very specific set of criteria that are only causing Chase losses, often by manipulating or gaming the system or outright committing fraud/illegal activities. I don't buy most of the other sob stories--we're only getting one very fragmented side of the story.

Is Chase infallible? No. Clearly not. They, like any other entity, are prone to making mistakes so maybe one out of 100 sob story is legitimate. But the rash of "OMG Chase Is Closing Down All Accounts...It Must be The End of the World Mayan-style!!!" posts are getting old and often muddy the waters with inaccurate information. And perpetuating these posts with hyperbolic statements like "Chase has been on a rampage as of late, shutting down people's CC's left and right..." only further creates an information dissonance, making it hard to parse through what is fact and what is fiction.

First, let me just say that this is just a friendly discussion. I can't quite tell whether you really are getting agitated or it is the impersonal nature of an online forum that's causing some of your posts to sound that way, but I am not trying to get into a fight here.

As for credit card issuers, I think that they do only want profitable customers, such as those who don't take advantage of rewards and carry balances. The issue for them is that such a business model is unsustainable and is self-limiting, as it's very difficult to only target those customers. Further, even if a person does not currently fit into the "profitable customer" model, if he/she is not too unprofitable it still makes sense to maintain a relationship with him/her, since things change and a customer who isn't profitable today may end up being very profitable tomorrow, at which point it may be more difficult and more expensive to get that person away from the competition. Also, banks have very diverse financial offerings, so a bank that keeps a customer happy with its credit cards has a better chance of getting that customer to get a mortgage or a personal loan from that bank, etc... This is how the entire financial services industry works.

I agree and I think that we are saying more or less the same thing here. The issue here is that if you use your CC's in a way that maximizes their rewards, you aren't profitable.

I, for instance, use the credit card that pays 5% cashback on gas purchases exclusively for gas purchases and nothing else, while I use another credit card that pays out 2%-2.5% cashback on everyday purchases, another credit card when I need to maximize mileage rewards, etc... This is certainly not the way CC issuers hope that you do things, which is the reason that the issuers' and the customers' financial interests are not aligned. From what I've read, Chase is currently having a fit over unprofitable customers and has shut down some CC's for as little as $1,000 in cashback.

With all due respect, where are you getting this information? As I think we all agree, we don't have all the facts, so I am surprised that you feel comfortable making these statements so unequivocally, especially in light of your earlier post in which you agreed that we don't have all the facts.

As for causing Chase losses, remember that it doesn't take much to fall into that category, as its profit margin on customers who don't carry balances is pretty small (also remember that Visa/MC/Amex take a percentage, as do other companies for whom Chase runs affinity programs). If you wisely use your CC's in a way that maximizes your rewards and takes advantage of each CC's strengths while not using it for anything that it is weak in (and select CC's that lead in their respective rewards categories), you are a financially sophisticated person, which probably makes you an unprofitable credit card customer.

Sorry. I'm a little exasperated, because this thread started off what seems like the 20th 'Is Chase going to close my account down?' post in the forum in the last 2 weeks. And it just seems a little nonsensical. So perhaps that is coming across in my writing. I also admit, I am a little frustrated with some of your statements, because they don't appear factual, but rather more based on the gossip-mill and I think that's counter-productive.

Regarding this last post, I think you have some legitimate points. However, I'd point to the fact that Chase has been aggressively, highly aggressively, rolling out generous rewards based cards. And they are advertising them heavily, too.

For instance, you can't walk through Grand Central without seeing a dozen signs for the Hyatt card, or walk through Newark Liberty without seeing a dozen ads for the United Explorer card. Plus, bloggers get commissions for promoting those cards. Its a lot of money and a lot of focus on a specific set of cards--all solid rewards cards.

Some believe it is a tactic to steal them away from Amex. Whatever the reason, it's a pretty strong and committed move and a corporation does not embark on that sort of strategy unless it is profitable. Yes, some of these bonuses have dropped, but that seems to be because Chase has more customers and overall, there are more customers available in the market, so there is less of a demand to grab them.

Now, as for specific cases--yours sounds like you may be unprofitable, but I am unsure of commissions on purchases for credit cards. If you're getting no less than 2 and 2.5 percent/points on each purchase, without carrying a balance, yes--you might be unprofitable. I don't think that's possible solely through Chase unless I am missing something, so it may be through a broad spectrum of companies and cards. But if you're not engaging in egregious abusive behavior--like rampant gift card purchases--you are probably still safe.

I am not sure where I fall in--I'd guess I average somewhere between 2 to 3 points per dollar spent, but only because of my use of the UR Mall. Which Chase gets commissions on, so they're doing fine off of those. But there are certainly expenses and charges I have--both personal and business--where I get no more than 1 point per dollar spent. On the whole, I am guessing I'm a profitable customer.

Anyway, it's just more helpful to discuss these topics with actual data and rational reporting than unnecessary alarmism combined with very vague assumptions.

Since I'm commenting on the people who claim to have gotten their accounts closed--which is the only information available--it is from those posts. Many of them were clearly engaging in behavior that was manipulating the system (solely buying gift cards for higher category bonuses) or otherwise violating the T&C. In many of those posts, other more savvy and critical-minded posters saw flaws and inconsistencies in their statements when they questioned the original OP or it was otherwise easy enough to read between the lines. You can say I'm drawing broad conclusions, but eh, it's easy enough to call BS on internet ramblings.

As for the latter, this is very case specific and we'd have to look at all their percentages involved. I think the amount of genuinely unprofitable customers--when you look at a 1 year statement--is much, much less than you'd think if said customer isn't solely buying gift cards, opening and closing accounts upon receiving the bonus, etc.

Fair enough. I will say that over the past several weeks I have read a lot of posts on this subject, which all had essentially the same complaints, which leads me to believe that it's more than just conjecture or Chase hating. At the same time, it is absolutely true that we don't and can't know all the facts.

I do know that up until about 2 months ago, all the posts about Chase shutting down accounts for "abuse" were extremely infrequent. So, the number of people all reporting essentially the same thing taking place over a very short period of time, while certainly not definitive, suggests to me that Chase is in fact on a rampage to get rid of customers that it considers to be unprofitable. You may disagree, which is fair.

Oh, I am unprofitable and very proud of it (not because I am causing CC issuers losses, which is not my intent. I am proud of the fact that I maximize the rewards, which is a smart financial move and I have no obligation to look after CC issuers' bottom lines, just like they have no obligation to look after mine).

For a card-present transaction, CC interchange fees vary between about 1.1% and about 2.5%. For card-not-present transactions (such as internet purchases), the interchange fees are about 1% higher. As I mentioned above, Visa/MC/Amex then get their share, as do companies for whom the issuer runs an affinity program. Then there is the cost of doing business, such as customer service, the cost of various benefits (not just rewards but also insurance benefits, purchase protection, etc...). It doesn't take much to become an unprofitable CC customer. Credit card issuers just can't afford to get rid of all unprofitable CC customers (plus, as I mentioned above, an unprofitable CC customer may still be a profitable bank customer because he/she takes out a personal loan based on the relationship, etc...).

I agree but unless you can convince Chase to give you the data, you aren't going to have more facts than what's out there.

Isn't it the same situation with every merchant out there? You read the reviews with an understanding that mistakes happen, that every customer cannot be satisfied and that some people are just unreasonable. With those caveats, a couple of negative reviews in the sea of positive experience aren't a problem. At the same time, when quite a few negative reviews pop up, which all report essentially the same problem over a relatively short period of time, that's a concern and a serious one at that. I don't think that this situation is any different but you certainly have every right to disagree and I respect that.

Here is what I have a problem with here. Does it say somewhere that GC purchases violate T&C? It doesn't and Chase agrees, which is the reason that all the closure letters that people have posted do not point to a specific violation of T&C but, instead, give vague references to "rewards not used as intended" (what does this even mean? Is there something in the T&C about the intent of the program?).

I didn't personally put any GC purchases on any of my Chase cards but I don't like it when people start talking about non-existent T&C violations. I have no doubt that CC issuers did not intend for me to only put gas purchases and no other charges on CC's with 5% cashback. It is not a violation of T&C, however. If a CC issuer decides to close my CC for it, I suppose they have every right to do that but they don't have the right to falsely claim that they are doing it for any reason other then the fact that they are paying out more in cashback then they had intended to do. They don't have the right to portray their mistake in rolling out such a program as anything other than that. They certainly don't have the right to blame me for it.

I think we're going in circles with neither of us convincing the other and I've said all I have to say on this topic, so I'll leave it at this: We're not hearing any news stories, no Nightline exposes on how Chase is wholesale closing down accounts of its reward-base customers, no speculation in the Wall Street Journal on Chase's actions and activities in a major portion of its credit card holdings...or anything beyond some disgruntled posts on some threads about Chase closing accounts.

I'll be happy to eat my words if it hits the NY Times. Otherwise, I'm going to continue on the premise that these are mostly egregious cases of point gouging or other violations of the T&C (with a few wrongly closed down accounts thrown in) combined with rumor-mongering and general lemming-like hysteria.

Just very quickly, please remember that there is nothing about buying gift cards or cash equivalents that makes the purchases unprofitable for CC issuers. CC issuers still get the same exact commissions for those charges as they do on regular, everyday charges.

CC issuers' problem with those charges isn't the fact that there is something unique about them that makes them unprofitable. Instead, the CC issuers' problem is the fact that the rewards promotion is too rich, so that the value of the rewards greatly exceeds the CC commissions and all the "undesirable" card purchases just increase the CC issuers' amount of rewards that they have to pay out.