I never did much like credit card companies

[Xue Sheng]

Credit card companies are cutting people's limits below their outstanding balances without notification

How to Blow Your Credit Limit -- Without Spending

 

[CoryKS]

Nothing wrong with reducing someone's credit line, but they should at least have the courtesy of warning their customers in advance. Charging them a fee for being over the new limit IS wrong.

This is weird:

Paul Pensabene of Saratoga Springs, N.Y., received a statement from HSBC on Dec. 8 that said he had a $359.99 balance and remaining available credit of $8,640. But when he went online to pay the bill several days later, his online account showed that same balance put him over his newly-reduced credit line of $300.

He was carrying a $360 balance on a $9,000 credit limit and they slashed him to $300?! That doesn't make any sense, unless they're trying to push out the 'deadbeats'; i.e., those who pay off their balance on a monthly basis, denying the company of interest fees.

 

[Gordon Nore]

I'm not surprised the card companies are doing this. They're terrified of their customers becoming suddenly insolvent and not being able to make those minimum payments that make the credit business profitable.

What bothers me is if people are getting their credit rating damaged because the card issuer lowered the spending limit to below what the cardholder currently owes.

Under different circumstances, David Chaplin-Loebell wouldn't have minded that American Express cut his unlimited credit line to just $5,000. Except that when AmEx reduced his line in October, he had an outstanding balance of $10,000. "I found out by having a business purchase declined," he says. Repeated calls to AmEx failed to yield an answer about why the cut was made. Chaplin-Loebell, who lives in Philadelphia, is now paying the balance under his regular card terms, and presumes the line will free up for new purchases once he's below the limit. "For now, they've essentially frozen the account," he says, leaving him to juggle business expenses on his personal cards. American Express did not respond to requests for comment.

 

[Empty Hands]

This is particularly egregious, but not isolated. Other tricks include delaying statements or delaying processing of payments to increase the chances of late payments. Changing your rates or limits based on your activity pattern with retailers or your history with other creditors. Changing rates and limits without notice with an eye to creating non-"deadbeat" card holders - i.e. people that pay their balances and do not pay interest.

These people need to be slapped down.

 

[MA-Caver]

When I studied on how to be a financial adviser for A.L. Williams (way back when) one of the valuable things that I learned about Credit Cards is that 1. people abuse them without realizing what they should be for. 2. Credit Card companies don't warn their new clients about the little fees here and there. 3. Credit Cards (CC) should be used for emergencies... i.e. go on vacation with the family, have a set limit in CASH or Travelers Checks (better) and the CC is used for unexpected things, i.e. flat tires (if driving) or medical emergencies (unexpected trips to emergency rooms or clinics, unexpected overnight stops at hotels and etc. Or even at home emergencies where the pipes break and so forth and it would mean having to dip into savings or checking.
Yet the ads on tv and so forth (which are *ahem* priceless :wink1: ) get people to use them like money in the bank. Money... that isn't there yet. Getting an advance on paychecks that haven't been written or deposited.

With their insane interest rates and fees and all of that they WERE making a killing off those who were using CC's like cash. But they're sniffing the wind just as we are and they see a decrease in CC usage in the future as the economy gets worse and belts get tighter. Remember this folks... CC companies are usually just a branch of a larger bank.

 

[KELLYG]

The guy with the American Express card (in the article) is probably having a problem different than the others. I worked with American Express several years ago. Regular American express cards are different, they are based on your personal ability to pay. If you have a sudden pop in the account balance they may require banking formation for x times the balance if it is not provided then they cut you off till the balance in full is paid. They will also review "accrued but un-billed" charges and require the same.

I have a friend that his % went from like 6% to 19% with out any provocation. Paid on time, balance in full each mo. etc. Needless to say this card was canceled.

Times are getting weird.

 

[Andy Moynihan]

Well for a couple decades now we've been an instant-gratification culture, buy-now-pay-later kind of society.

That's about over.

 

[terryl965]

I deal only cash and checks so it does not bother me.

 

[Bob Hubbard]

Nothing wrong with reducing someone's credit line, but they should at least have the courtesy of warning their customers in advance. Charging them a fee for being over the new limit IS wrong.

This is weird:


He was carrying a $360 balance on a $9,000 credit limit and they slashed him to $300?! That doesn't make any sense, unless they're trying to push out the 'deadbeats'; i.e., those who pay off their balance on a monthly basis, denying the company of interest fees.

People who pay off every month are not who they want as customers. They make little to no money on them. They want people with large balances who pay the minimum only, which maximizes profits.

 

[Bob Hubbard]

People who pay off every month are not who they want as customers. They make little to no money on them. They want people with large balances who pay the minimum only, which maximizes profits.

A.L. Williams? I've got his book.


I haven't had a credit card since, 2003. Been going cash only since then.

 

[Empty Hands]

I haven't had a credit card since, 2003. Been going cash only since then.

Do they take debit cards for car rentals, airline tickets and the like where they normally require a cc of some sort? That's the main reason I have one - you really seem to have to have one now and again if you want to do a lot of things.

 

[Gordon Nore]

A.L. Williams? I've got his book.


I haven't had a credit card since, 2003. Been going cash only since then.

I'm the first to admit, after many years of learning the hard way, that I am bad with plastic. I had my card rolled back to $500. My wife has custody of the card with the high limit. At $500, I can't get too stupid, and if I do, I can cover it on the next pay cheque.

Notwithstanding the crushing economic times, I think there are a lot of people like me, and we get ourselves into deep trouble.

 

[Carol]

Do they take debit cards for car rentals, airline tickets and the like where they normally require a cc of some sort? That's the main reason I have one - you really seem to have to have one now and again if you want to do a lot of things.

Most do, if its a debit card co-branded Visa/MC/Discover. But, its a PITA. Many merchants of that sort will put a hold on certain funds on the account for a given time...which means you can't ask them. Renting a car usually means a ~$400.00 hold that should be released when you turn in the car however they won't promise the release of funds until the next billing cycle. They call it a "hold" but its the moral equivalent of them taking the money and then giving it back. Better to use a credit card IMO.

 

[Rich Parsons]

People who pay off every month are not who they want as customers. They make little to no money on them. They want people with large balances who pay the minimum only, which maximizes profits.

This is what I do.

None of my cards have been lowered in limit.

They have all seen credit rate increases, but as I pay the one I use off each month, this is not an issue to me.

But because of this, I was not allowed to get certain cards with certain rewards programs.

 

[Rich Parsons]

Do they take debit cards for car rentals, airline tickets and the like where they normally require a cc of some sort? That's the main reason I have one - you really seem to have to have one now and again if you want to do a lot of things.

After my divorce when I could not get a credit card, my bank and also a credit union I had a few dollars in changed their debit cards to Credit Debit cards. This way if you needed to make a purchase online or over the phone you could.

Also for when you were at a store that could not handle debit cards yet.

 

[Carol]

This is what I do.

None of my cards have been lowered in limit.

They have all seen credit rate increases, but as I pay the one I use off each month, this is not an issue to me.

Same thing happened to me. I carried a balance on the Visa I have through my credit union for a long time. I finally got it paid off last year....and my rate jumped 3 points.

 

[jks9199]

Buried in the fine print of some card holder agreements is the nifty little detail that they may raise your rate if you become delinquent on ANY payment -- even to other cards or businesses. In other words... one late payment, and ALL your cards can be jacked.

 

[Xue Sheng]

Buried in the fine print of some card holder agreements is the nifty little detail that they may raise your rate if you become delinquent on ANY payment -- even to other cards or businesses. In other words... one late payment, and ALL your cards can be jacked.

But these people do not have late payments, just surprise limit reductions

 

[jks9199]

But these people do not have late payments, just surprise limit reductions

Which is even slimier. OOPS... we're dropping your limit to $1 below your current balance so that we can charge you the over-limit fees. Sure, you weren't over your limit till we changed it arbitrarily -- but you're still socked with the fee. Y'know... if I did that on the job -- it'd be perilously close to entrapment!

 

[grydth]

If the grotesque bonus gorgings haven't told you enough about the degenerate ilk running corporate America today this is, if anything, even more revealing.

Millions of families across the country are struggling with reduced incomes, lost jobs and soaring costs.... and how does AMERICAN Express react? Maybe, can we help you out in any way? Can we lend a hand to national recovery? Can we make it easier for you in hard times?

No, of course not! It's 'can we stick it to you any way we can', can we be the straw that makes you fall? Can we gouge you, gorge upon you, even though you've been a loyal customer for years?

Let's call this what it is: unprincipled greed and predation. With AMERICAN corporations like this, who thinks we even have a chance as a nation of coming back?

In many other countries, this disgraceful conduct would be called profiteering and treason in a national emergency and the cannibals would've been stood up against the nearest wall and shot. I used to look down upon such countries.