Skip to comments.A (Very) Watchful Eye on Credit Card Spending
Posted on 02/02/2009 11:36:30 AM PST by Clairity
You probably know that credit card companies have been scrutinizing every charge on your account in recent years, searching for purchases that thieves may have made. Turns out, though, that some of the companies have been suspicious of you, too.
In recent months, American Express has gone far beyond simply checking your credit score and making sure you pay on time. The company has been looking at home prices in your area, the type of mortgage lender you're using and whether small-business card customers work in an industry under siege. It has also been looking at how you spend your money, searching for patterns or similarities to other customers who have trouble paying their bills.
In some instances, if it didn't like what it was seeing, the company has cut customer credit lines. It laid out this logic in letters that infuriated many of the cardholders who received them. "Other customers who have used their card at establishments where you recently shopped," one of those letters said, "have a poor repayment history with American Express."
(Excerpt) Read more at finance.yahoo.com ...
It's ridiculous to punish one customer for the problems of a "class of others", instead of looking at the individual credit and payment history of each customer.
later reading ping
It won’t be too far off: “Mr. Yokel, you ingest too much HFCS and alcohol. You have been reported to the National Health Agency.”
THank you, American Express (a subsidiary of NPR).
Regards, Mastercard (a subsidiary of your local government-owned bank)
I have heard that credit card companies stand to lose money for the first time ever. As soon as I can gather up some cash, I am going to offer to pay them 2/3 of my outstanding balance in a lump sum if they will take it. Of course it must be in writing first.
What they wanted to do was monitor the programs I watched and then sell that info to their advertisers. I never plugged it in, lol.
We’ve noticed a payment to a entity of governmental concern called Free Republic LLC. You have been reported to the Department of Homeland Security. You will be notified regarding which national emergency center to which you should report. After we have recieved the proper documentation we will make determination on you credit credit situation.
I have just paid our American Express Gold card down to zerO, and we won’t be using it any longer.
In 2006 I made $29,500 dollars worth of purchases on my card. That included eight months were out balance was $3,000 or more. In 2007 I made $25,000 dollars worth. That included two months with balances of $5,000 and $5,600 dollars. Several others were in excess of $3,000 and a few others over $2,000. Last year, I made about $3,250 dollars in purchases on my Gold Card all year.
The last three Christmases this company decided it was a good idea to limit my December purchases. Three fricken years and no payment made more than four days late. I paid the big balances on time. Once payment in that period of time was three days late. Two were one day late.
I am a 22 year client of American Express. They make their money off my purchases. They get a percentage off my purchases, and I get to float my purchases on their card.
When I have cash flow issues to contemplate, I want to know that I have a partner that is going to be there. Well, these three years A/E set a $1,000 dollar limit during the holidays. And when my balance was $900 on my November statement, they wouldn’t let me charge more than $100 until it was paid.
I hadn’t been late on a payment in over 18 months when that took place.
My wife and I decided it would be best to use our other cards. We can pay them off just as easily as we can the Gold Card.
Pretty smart move on American Expresses part. A few percent of $25,000 is a fair amount of money from one customer. They won’t be getting it off our account any longer.
My wife as a massive line on her business card. I wonder how American Express is going to like losing the percentages off that card.
A/E has become too smart by half.
AMEX definitely DOES look at individual credit and payment history of each customer. The standard AMEX card doesn’t carry any formal limit, and the real limit is constantly being adjusted based on all the factors AMEX can get hold of. Many years ago, I suddenly started making much bigger charges than I’d historically done (like single charges in amounts similar to what I’d historically charged over an entire year). The first one was actually airline tickets for a business trip that was going to be reimbursed. They didn’t block the charge when I made it, but did wisely give me a call soon afterwards just to inquire about 1) whether I’d actually made the purchase, and 2) what my current income was. As my charging patterns gradually rose much higher, and my payments remained timely, I never heard from AMEX again, and never had a charge blocked or questioned.
If somebody is charging payments to, for example, a sketchy multi-level marketing outfit (”just buy our $1000 start-up package, and you’ll soon be making $100,000 a year”), half of whose AMEX account holder customers had defaulted on their AMEX card payments within 6 months of making their first charge with the “merchant”, AMEX would be nuts not to scrutinize the account and reduce it if other factors weren’t impressive enough to offset the black mark.
I don't think that it sounds stupid or evil. I wouldn't want to loan money to somebody who appears to be spending it at adult establishments either and is apparently too stupid to realize he should be paying cash for items he doesn't want the wife to know about.
If ya take somone’s money, even on a loan with a promise to repay, ya ain’t got much to complain about if they’re checking up on your ability to repay it.
Irresponsible use of credit is what got us into this mess...now we’re going to complain when the finance company is trying to keep ahead of the game and restrict their losses?
If the American Express customers don’t like it, I suppose they could use their Visa or Mastercard.
Sometimes I really don’t get all the fuss.
“Furthermore, we’ve been tracking your online purchases and note that kind of books you’re ordering at Amazon.”
That’s why Cletus uses cash for his “video” purchases! Hahahaha.
Insurance companies are doing the same thing as well.
“Weve noticed a payment to a entity of governmental concern called Free Republic LLC. You have been reported to the Department of Homeland Security. You will be notified regarding which national emergency center to which you should report.”
Bring only what you can carry. Dress warmly and be sure to bring a shovel.
Weve noticed a payment to a entity of governmental concern called Free Republic LLC. You have been reported to the Department of Homeland Security. You will be notified regarding which national emergency center to which you should report. After we have recieved the proper documentation we will make determination on you credit credit situation.”
I donate to Jim and FR only by cash. I can only send a small amount, and I don’t need my checking account or my credit cards showing that, either.
Even when I win the Lottery, I will do LOTS of CASH purchases. It’s no one’s business how I spend my money, and it most certainly isn’t information that some snot-nosed Liberal educated punk needs to be examining to determine MY credit worthiness.
Most of the last 25 years crops of “students” couldn’t pour pee out of a boot if the directions were written on the bottom of the heel.
22 years is a heck of a plus on your credit scores. Depending on other factors, canceling the card could cost you valuable points. You should consider keeping it with just token balances.
You can blame "data mining" for these sorts of activities, that is, where huge databases are subjected to very esoteric statistical analyses to spot future trends. One of the prime culprits/beneficiaries is SAS. If this practice is curtailed in the future, that could negatively impact SAS, possibly leading to layoffs at the software firm.
It was also to enable you to order pay per view movies. We had DISH too, but had already switched to an internet phone provider. They wanted us to fork out an extra $5.00 per month if we DIDN'T hook their receiver to our phone, so we agreed. The trouble was that their receivers were technically incompatible with internet phones so it didn't work. It took us months to convince them of this and rebate all those $5.00 charges because their tech staff didn't even know that. It also cost them three separate service calls (on their nickel) before they finally gave up and refunded our money.
I never had a credit card in my life(I’m 50). I use my debit card with a VISA logo for most purchases. I guess I am old fashion. I feel if you don’t have the money, don’t buy it. You can rent a car if you travel with the debit card. They charge between 200 and 400 dollars deposit that is returned to your checking account when the car is returned.
Our CC company froze our account due to the FR transaction. It was cleared up with a phone call, but still... Last month there was a suspicious $1.00 charge (that was, indeed, fraud). We had to get a new card. We, too, are weening ourselves from their grasp, as well as all the monthly charges we can. We’ve been a couple of months without TV now and are amazed at what a good decision THAT was. 60-70 bucks a month for hundreds of channels of worthless propaganda. It feels so good to not support that crap anymore.
They certainly have.
For quite some time they were a great company. I went from green card to gold card to platinum card, but in between the last two they were changing their attitudes.
I've given up on them as a bad partner.
Yup. I knew/know that but I didn't ever order their movies.
I’ll probably do something like that. I’m not going to cut my nose off to spite my face, but I was tweaked to say the least.
Not good for your credit rating, though, if you do that.
Well, I’m not happy with them, but I’m not going to cancel the card. I’m just going to use it less, much much less.
I have a Citi AA advantage card. I always pay it off or there wouldn't be any point in having the card. They just jacked up my rate 3% to 17%. They ought to be dropping rates to entice people like me to borrow. The form letter informing me of the rate increase also lectured me on using credit wisely. This from a bank that made something like a trillion dollars in bad loans.
I would send them a thanks but no thanks for the opportunity to pay 17% interest.
IMO, anything over about 12% is userous. When it gets up about 29%, they should be locking people up and throwing away the key.
We recently paid off our Chase Amazon credit card, and today we got the first bill with the zero balance. Guess what it said our effective annual percentage rate was:
I’m not kidding. So we called them right up and closed the account, which was the reason we paid it off anyway, because the month before, they had raised it to 34%.
We also got a bump in the interest rate on our Citicard, to an effective rate of 15%, so we’re going to shut that one off too as soon as we pay it off with a line of credit from the credit union. We’ve never missed a payment on that one in over 10 years. It’s our American Airlines mileage card, and we’re shutting it off. Will they take 2/3s if we offer only that much?
I don’t blame you. Be careful of agreements to pay down cards by a percentage such as 2/3rds. Many of them will report it to the credit rating companies. That can ding your credit.
It cost $5 to not plug it in.
My credit rating is near 800. If it is bumped a few points it would be worth it.
22 years is a heck of a plus on your credit scores.
Many of us don’t give a hoot about scores, especially those of us who owe nothing to nobody and don’t plan or need to. I had AMEX cards of various colors over the years and finally wondered why I thought I needed it. It’s all hype, credit scores and color of card status and the false sense that you had to have AMEX to be worthy of anything. Nonsense and bull!!!!
I cancelled after 32 years of having one and now charge to other brands and payoff monthly just as I did with AMEX and discovered that I really am a person even without AMEX. There are thousands of us out there who really exist without AMEX and we get along just fine without it.
The problem is not that they are looking at your history, the problem is that they are punishing individuals for the action of others.
I think if the customer closes their own CC it doesn’t impact their credit rating. If you would close all your cards, that would leave you with no credit available, that probably would harm your rating.
They affect your insurance rates, employment at many places, any loan you make - emergency perhaps, credit offered for medical bills, and on and on. Credit scores affect a lot more than most people think. More than they should, but they do.
I know this isn’t popular, but closing an account (or having zero balance which doesn’t report) lowers your FICO score, which other credit issuers monitor, which can lower you limit, which lowers your score, which creditors monitor who can increase your annual rate...
And on and on. It’s a cycle folks have to stay ahead of and know how it works.
Common misconception. Doesn't matter who closes it. What matters is you lose a positive credit tradeline. And the longer (older) that line was, the more it hurts your score.
Should have pinged you to post #38.
Congratulations on your 800. If you have a lot of lines, and a lot of revolving as well, and a lot of old lines (which you likely do) closing one line won’t hurt your score too much - unless that line is contributing substantially to lowering your debt/limit ratio.
Boy, I hear you. AmEx tweaked me bigtime about a year ago. But, like you say, nose and face - use them and don't let them use you.
In general right now, everyone I trust in the credit world says, lower your debt/balances as much as you possibly can - but keep a very small balance at least to keep the line reporting and keep the issuer from closing it.
Cash is king now, but if high inflation begins, things change and if possible you always want to keep credit available at the lowest rate possible. In a nutshell: lower your debt; guard your scores.
That hasn’t been the case for us. We actually received a notice from our insurance company that said our insurance rates were going UP because of our credit risk due to zero balance/open credit accounts. I think they look at all that potential credit card debt as a risk, as would other lenders. We’ve closed lots of accounts we used for zero balance debt reduction offers, paid off, then closed. Other accounts have been closed by them for inactivity. I’m sorry, but that Amazon card sticking us for an annual effective percentage rate of 74% tells me they want us gone. Maybe we’ll just payoff the CitiAA card and leave it open, but stop using it. But then, we’ve said we were doing that before, and kept using it anyway. I think a good old savings account for emergencies and our debit card is the way I want to go. I’m sick of credit card debt and these guys are just going to keep getting worse until the law changes next year to regulate them.
My goal is to be debt free except for the mortgage and then to never borrow again. At that point, I wouldn’t care if my credit score was zero.
I’m going back to cash. Except for emergencies, using credit cards for conveniences is borrowing money from your future.
Debt freedom is my goal as well. I racked up a lot of credit card debt when I was in nursing school and my mother got knocked down with cancer. I couldn’t pay for gas and food and pay my bills at the same time and take care of my mother.
When you owe someone money. They own you.
There are some good owners and some bad owners.
When you use a credit card or even a checking account. You are
giving up some of your personal freedom.
You are absolutely right!
Just reading World Net Daily article called Death of Cash = Death of Liberty.
Scary. I’m mildly irritated that I have to use direct deposit for my salary checks. Very good article. I don’t I’ve ever used up all of a gift card. Those pennies add up.
I agree with that logic. In fact, it’s a good idea just about anytime.
Bear in mind that a zero balance does not report on FICO (the credit scoring model). So, for example, a one dollar balance with a 100 dollar limit increases your score more than a 0 dollar balance on the same account. Further, if you don't have any balances on any revolving accounts, that impacts your score negatively.
I agree with you that 74% is ridiculous. And you are exactly correct in thinking they don't want you to keep it. I can't speak for Amazon on this one, but what is going on is credit card companies are decreasing their exposure - canceling inactive accounts/lowering limits and raising their fees.
This is their business and what they think they need to do at this time. The point I'm making is that these actions results in a much lower credit score for a great many folks - unless they know what to do.
Credit scores impact our lives in a lot of ways other than borrowing - and we never know when we might want to borrow or when borrowing will be the wisest financial option.
I truly understand your points here, and I agree with the sentiment. What's at stake with your score in the near term is losing long positive history. If some of your cards you close are seven, ten, twenty years old.. you can't get that back helping your credit score for a very long time.
Here's a really brief ABC news radio story about Should I cut up my credit cards. It gives the basics anyway.
Thanks for your reply.