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It's Not You, It's Where You Shop

posted by Bob Lawless

A lot of stories had been circulating on the Internets and through the Google that consumers were getting hit with lower borrowing limits on the credit cards. Sometimes, they received notice the limit was lowered, and sometimes they found out only when they went to go use the card. American Express was often mentioned. A story is up at the New York Times web that delves into the mysteries of this practice. It helps answer a lot of the questions about what the heck was going on. Cutting through the rhetoric, I understand American Express to be admitting that they were cutting credit scores based on where you shopped. Sure, it was not all done on where you shopped, but it appears that was an important component. As the NYT article suggests, we know American Express was doing it--they say they have stopped--but who else is doing it?


wow, I have not seen that personally or here in the office. I have been getting increases on my credit card limits (without me asking for it). The first threatened to close my account and when I did not respond and continued to pay, they then started raising the limits. weird huh?

Amex has been the *worst* credit card issuer lately. I've been helping a friend (I know, I know- it was really a friend!) with her problems since she closed a business in Dec 07. She went to Consumer Credit Counseling (the original one) and everyone accepted her 'plan' to make payment according to the CCC plan EXCEPT American Express. Everyone else accepted - Capital One, Chase, Advanta, Macy's, etc, etc. For 1 full year (until Jan 09) Amex continued to attempt to collect the balance due and all the while the Credit Agency sent in the $97 payment according to the original plan. Also for 1 full year, Amex accepted the payment of $97 and then charged a $75 late payment fee (even though the payment wasn't late) so my friend was not getting anywhere with the open balance of $3287.58. Then suddenly, within days of Amex being converted to a bank, Amex sent a letter and said that they have 'always worked with Credit Counseling Agencies' and would accept the plan. This was 1 year after the plan had been submitted and rejected and another $900 of fees were added to the account. This month is the first statement that the full payment went towards the balance with no other fees being added to the balance. If this is how AMEX behaves as a bank rather than a non-bank then good riddance to the old American Express.

HSBC - GM Card did it to me. They said I never used the total credit limit so they were lowering it. Indeed, I seldom use the card - it's my backup. I pay in full every month without exception, on both cards.

What's important here for the consumer is to carefully monitor reports from each of the three credit bureaus more than once a year. Detecting any data that is incorrect or suspect as soon as possible is key to avoiding a problem which could mushroom quickly become a Kafka-like nightmare. Users of bill pay services should note and update changes to creditor information (payment address, phone numbers, etc) so that an electronic payment is matched to the proper routing number for a creditor. Failure to update certain details could result in an unintended late payment and the unpleasant downstream impact.

It's best to keep cash in a locked safe and forget about credit cards except ONE bank card for car rentals and hotel rentals. It's a frenzy for the banks and damn be the customers. The banks even have the nerve to call people who pay their accounts in full every 30 days "deadbeats." Imagine that. When I was a collector, we called the people who were 30-60-90 day delinquencies "deadbeats" because they wouldn't pay. I hever imagined I would be called a "deadbeat" for PAYING my bills! To hell with the banks. They make their money off the backs of the unsuspecting.

It would seem the same financial institutions that got us into this whole mess are now trying to drive our credit scores down purposely. I say we pull ALL our money out of banks and cut up the credit cards and THEN see what they'll do without us.

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  • As a public service, the University of Illinois College of Law operates Bankr-L, an e-mail list on which bankruptcy professionals can exchange information. Bankr-L is administered by one of the Credit Slips bloggers, Professor Robert M. Lawless of the University of Illinois. Although Bankr-L is a free service, membership is limited only to persons with a professional connection to the bankruptcy field (e.g., lawyer, accountant, academic, judge). To request a subscription on Bankr-L, click here to visit the page for the list and then click on the link for "Subscribe." After completing the information there, please also send an e-mail to Professor Lawless (rlawless@illinois.edu) with a short description of your professional connection to bankruptcy. A link to a URL with a professional bio or other identifying information would be great.