AngryPrez

Guess the moral of this story is forget about the banks, join a credit union if you can -- better rates on cards and forget about all that other stuff -- www.CULookUp.com will find one near you ...

GaryZ

Its gotta be 09/09/09, not only do I agree with you, but with Van, to boot!

BostonMark

Say they make 1% of every dollar you spend... then have to pay 1% to the airline to buy the miles that they give you... it's break even. And, from what I understand, the miles cost more than any interchange fees they get - it's part of the reason airline cards have annual fees and high interest rates.

P.S. Van... you're 100% right!

What's been going on is that credit is tighter than it has been for a long time. With less money to lend (which essentially is what the card companies are doing,) they have to find the most profitable customers. Those customers are:
1. Good credit risks unlikely to default
2. Carry small balances on a regular basis
3. Don't max out their cards or pay their cards in full

Look at it this way: a card companies potential exposure is the sum total of all their card's credit limits. If the bank has less money to lend because their reserves are lower, then they have to reduce their potential risk for breaking their reserve requirements. The easiest way to do it is to cut credit limits. Whose get cut? The least profitable customers (those likely to default and those not generating enough revenue...) In some cases interest rates are being hiked to discourage you from using the card - or making it punitive for you if you want to leave a balance on the card.

A year ago when looking for mortgages everyone was at 5.25-5.75% - B of A was at 9.5% - why? They decided that they didn't want to write mortgages in California and if you insisted they would make you pay for it... no different than what the card companies are doing now. When the crisis passes they'll magically start lowering rates and sending out great balance transfer offers again because it will become competitive again.

VanTheMan63

No...I don't think it was necessarily "random."

I'm sure they looked at me, looked at my FICO (and outstanding obligations) and decided, as a holder of millions in mortgages, statistically, I was at serious risk of default. Of course, a FICO doesn't take into account "debt to equity" ratios nor revenue streams.

I know 2 Black Card holders...one a client of mine, another a client of my wife's...they have the same story...and you need to charge $20K a month to get/have that card...not allowing them to run CLOSE to $20K a month.

I have LOTS of stories about banks cutting lines of credit....LOTS of stories.

And I see the post on a Credit Union...well, not so sure they are "ideal." I ahve a credit union working towards potentially trying to foreclose on me...I have a "mixed" building in Rhode Island...commercial down stairs, residential up stairs. Has a commercial loan. They called the note...gave me 90 days to find another lender. (yes, they can do that) I've never been 5 minutes late and am, in fact, EARLY, whenever I pay anything with that building.

The part that stinks...they are in a GREAT position. I can sell it and pay the bank off, EASILY, but I'd lose the $750K or so I have in the project. They're whole, almost no matter what...I'm the one left holding the bucket.

Being who I am...I won't let it come to that. I have 3 other ideas...and this is a learning process...but I can tell you, I NEVER want to go through this learning again.

But yes...they are cutting lines, closing loans/lines everywhere...they HAVE to get their balance sheets fixed. And like I sad earlier...I've played by the rules, I have (well, had) "debt to equity ratios" WELL within a "safe" range...and the people that are getting hammered the hardest are those people.

Beckles

I never said they weren't cutting lines and closing accounts, I only said they are not closing accounts for "no reason whatsoever" and you decided to disagree with that statement that wasn't directed at you. I don't think you honestly believe it was for "no reason whatsoever", rather you just don't think they had a good reason. A bad reason is still a reason.

alm5150

I don't agree that one should not be concerned with these tactics if they are a good customer. I have a very high credit score and just fell victim to the 33% interest rate. I scheduled a payment early since I knew I would be overseas when my payment was due. The credit card company applied it to the previous month and then called me late for the month the payment was intended for.

I called and they refunded the late fee...I thought I was all set. Many apologies. Then they turned around and upped my rate to 3 times the normal rate and said it was due to the late payment and I have no recourse.

wendyg

They make *some* money off of us in the percentage commission from retailers for taking the card and in foreign exchange commissions if you use the card abroad. They just don't make a *lot* of money off of us.

Boston Legal did an episode a few years back in which the cc industry called monthly on-time payers "deadbeats". That may often be true, but at least one credit card company has gone to some lengths to keep me as a customer despite my monthly payment habit.

wg

ArizonaGuy

Way off topic but I loved that episode, along with the show in general. So glad they brought the Melvin Palmer character back for several episodes in the final half season.

The transcript of the credit card episode can be found here as a PDF. Couldn't find a Youtube clip, they get removed quickly. Here's an excerpt.

Alan Shore: Is it true your company actually targets people with bad credit ratings?
Attorney Melvin Palmer: Well, we have an extremely complex marketing strategy, one that I’d be happy to take some time and explain to you.
Alan Shore: That’s okay. I think I’ve got it. You find people in dire straits and market directly to them with the hope of forming a lifelong relationship. I had a former client who kind of operated his business the same way.
Attorney Melvin Palmer: Really? What line of work was he in?
Alan Shore: He sold heroin.
Attorney Melvin Palmer: Ha. My friend, I’m not a man who offends easily.
Alan Shore: So I could call you a loan shark and you’d be fine? When you charge your customers thirty percent interest, you’re a loan shark.
Attorney Melvin Palmer: That term implies criminal conduct.
Alan Shore: It’s not criminal because your parasitic lobbyists have penetrated both aisles of Congress. The credit card industry is more profitable that McDonalds, Microsoft and Walmart. You’ve got yourself a multibillion dollar racket going, Mr Palmer.

tommyleo

Sorry, but your rant against the US MC is nothing but ego, and your ego is causing you to miss the whole point of those egregious fees: US MC actually values YOU!!! You pay on time!! US MC is seeking to heavily penalize only those who screw up -- which you never do. So why are you taking this new policy so personally? Ego.

I have the same card. I never pay late and I don't carry a balance. I don't care about the new fees/rates because they only affect those who are irresponsible -- the same people that US MC is trying to get rid of anyway. Not you, not me. You are a good credit risk -- so why take it so personally that US MC is trying to get rid of the bad risks?

Analogy. If you never drive drunk, do you take it personally if your state increases the penalties for driving drunk? Of course not.

Surgee

Yeah but they have to balance that out as well.. their accounts payable can only get so big before their customers default on their receivables. Its a tangled liability/asset, credit card debt.

dfyant

The only thing I don't see talked about is that if you keep that awful Mastercard (and pay a high annual fee - don't get it waived), they will discount your awards by 5000 points each.

That may seem like a good deal however if you actually use the SPG Amex you'll bonus yourself 25% which is a better deal.

Of course you could just keep the MC and pay the annual fee then use the SPG Amex for bonus points - then get the bonus and the reduction.

Or to make it even better for Business class seats just use Aeroplan to book them. That's 40,000 miles insead of the 45,000 with reduction from US Air - with the SPG bonus your actual mileage cost is 32,000 miles for a business class seat on US Air in North America.

That's better then any US Air deal that I know of.

mit43

You've got to be kidding? This is the same policy almost every card issuer has. If you pay late or over the limit they will raise your rate and charge you the fee. What's the problem? Pay on time and keep it under your limit.

Hate on the US Air cards all you want, but I feel good about them considering my wife and I are just returning from 2 weeks in the Virgin Islands on award tickets earned on the US Air cards.

dfyant

With all due respect Barclays is very bad at rejecting larger purchases. They do it even if you call and warn them in advance. It has happened to me so often that we no longer use that card for anything other then small stuff - ever.

If you're not spending much it's a fine card for you. If you make larger purchases it's not usable.

sophiegirl

I need to re-read my fine print....but I either have a different card than most of you or ????? because even if I pay the balance each month, the card I have starts charging interest from the day of purchase so there would ALWAYS be finance charges!

As all I use the card for is to buy my air tickets, I can easily go in and pay it off same day - but now my curiosity is up.

And re AmEx- slightly different scenario...I had the extended payment option for years, and rarely used it. Last year I DID use it for a few months, and here comes the letter saying "we are applying a credit limit AND you no longer have the extended payment option...." The situation I was experiencing ended, all balances paid off and VOILA - here comes 2nd letter since you are a fav customer we are reinstating the extended payment option- but the credit limit still stood. (more credit than I would normally use or ever want, but still....) Called and said "no thanks". Yesterday got another letter - "since you are one of our fav customers, we have reviewed, blah, blah and have decided to remove the credit limit". Gee, could it have anything to do with the fact that I have pretty much abandoned AmEx? And when the renewal comes due, "pretty much abandoned" will become "cancelled".

alm5150's post is exactly why one should be concerned even if it doesn't seem to apply to you....

dfyant

You must be carrying a balance if they're charging you interest from the date of first purchase?

Otherwise they shouldn't be doing that and it must be an error I suspect (or they think you're carrying a balance even if you're not)