Canceling my card

[geojen]

Dh got the same letter. This was after they jacked his rate up to 30% for no reason whatsoever. We've never made a late payment on that card, or any other card for that matter. We opted out.

I'm waiting to get the same letter. I hate citi.

[Caoineag]

Dh got the same letter. This was after they jacked his rate up to 30% for no reason whatsoever. We've never made a late payment on that card, or any other card for that matter. We opted out.

I'm waiting to get the same letter. I hate citi.

Hmm wondering if I will get one of these. I have a citicard that they jacked to 30% for no apparent reason as well. I still have it because I don't carry a balance and they do the cashback but the fee would be more than enough for me to cancel.

[disneysteve]

How can they even put a tab on your minimum spending?

Like it or not, they are a business and the point of their business is to make money. They know how much it costs to maintain an inactive account and if they determine that it isn't worth having a customer who doesn't generate at least $60/year in income, so be it.

My wife was in retail for many years and most of the vendors she ordered from had a minimum order requirement. They simply didn't want her as a customer if she wasn't going to spend at least a certain amount each time she placed an order. Since she oversaw a very small store, that greatly limited the vendors she could purchase from. This is really no different. The CC companies don't want a customer who keeps their card in the back of their drawer and never uses it.

[wincrasher]

I'd be more understanding if they were just doing it to inactive cardholders. But, in their greed, are including everybody.

[disneysteve]

I'd be more understanding if they were just doing it to inactive cardholders. But, in their greed, are including everybody.

I agree with this. As usual, when the pendulum swings, it tends to over-correct. For years, they were granting way too much credit way too easily to way too many people. When that business plan crashed and burned, they started swinging the other way and really tightening the reins so that even people with great credit and excellent histories got snagged. Hopefully, as a little more time passes and the economy picks up, the pendulum will settle somewhere in the middle.

[Beppington]

So if Citi doesn't want my business and would rather have my card closed, then so be it.

They only want your business if the profit level is enough for them. Which makes sense.

And, it sounds like the profit level they need to make off you recently went up, probably to help cover other risks they have ... aka credit default swaps, sub-prime loans, etc. etc. etc.

[disneysteve]

And, it sounds like the profit level they need to make off you recently went up, probably to help cover other risks they have ... aka credit default swaps, sub-prime loans, etc. etc. etc.

True. This is something people don't always think about. The bank doesn't operate their credit card business in a vacuum. That is just one of the many services the bank offers. If the bank has been having trouble in other areas, like their mortgage department, they need to trim expenses, just like any other business. One way they can trim expenses is by closing down inactive or unprofitable credit card accounts.

As I said, they shouldn't be cutting limits and closing accounts of profitable customers, but in their efforts to reduce their risk level, they are going too far in many cases.

So far, I haven't gotten any such letters. We charge about $40,000/year to our cards so I guess they are making enough money on us at this point even though we don't carry a balance. I do keep waiting for the reward programs to cut back the benefits. Actually, Marriott did increase the reward points needed per free stay last year. I'm sure other reward programs will do similar things.

[wincrasher]

It's the same with insurance companies - they cover their losses by increasing the rates on customers.

Cut their margins? Ever think of that? Nope!

Well, knowing I'm a primo customer, I don't lack for other options. I have over 70,000 points siting in my AMEX rewards account - just from last year's purchases - without ever paying interest or an annual fee.

I think I'll go online and buy myself something shiny.

[disneysteve]

Cut their margins? Ever think of that? Nope!

Now you're talking nonsense. Didn't you see Wall Street? Greed is good.

[GREENBACK]

I have to wonder what their cost is to maintain a perfect customer like me. Yes, I only use the card occasionally but a quick look at my payment record should show them that they'll likely be paid back immediately. Does just my having an account cost them much? Does losing a potentially reliable customer constitute this action? Sounds like a poor buisness move to me but maybe I've missed something.

[Beppington]

I have to wonder what their cost is to maintain a perfect customer like me. Yes, I only use the card occasionally but a quick look at my payment record should show them that they'll likely be paid back immediately. Does just my having an account cost them much? Does losing a potentially reliable customer constitute this action? Sounds like a poor buisness move to me but maybe I've missed something.

They have to put a price on their risk. You may be a "perfect customer", but for example there is still some risk that you will go nuts today & charge up $20K worth of junk & never pay them for it. They have to consider that. Apparently they either weren't considering that until recently, or they weren't putting the price on it high enough ... or they're pricing that risk higher now since the likelihood of people defaulting on credit card & other loans is higher right now in our "bad economy".

DisneySteve is probably right though that this is more of a knee-jerk reaction, maybe even "forced" by the stimulus government overseers.

It will be that some of the "perfect customers" like you will go ahead & keep their cards with the new terms, thus the CC company will take in some of the money they need. Those "perfect customers" are probably not wise about personal finance like you, though - You recognize a bad deal; Certainly some won't. Of course "bad deal" is in the eye of the beholder.

[disneysteve]

I have to wonder what their cost is to maintain a perfect customer like me. Yes, I only use the card occasionally but a quick look at my payment record should show them that they'll likely be paid back immediately. Does just my having an account cost them much? Does losing a potentially reliable customer constitute this action? Sounds like a poor buisness move to me but maybe I've missed something.

Remember, they don't make much money off of the customers who use their card rarely and pay their balance in full each month. They'd much rather have the person who always carries a balance, makes late payments, charges over the limit, etc.

What seems like the "perfect customer" to you, isn't really the perfect customer to them, as backwards as that sounds.

[Beppington]

Remember, they don't make much money off of the customers who use their card rarely and pay their balance in full each month. They'd much rather have the person who always carries a balance, makes late payments, charges over the limit, etc.

What seems like the "perfect customer" to you, isn't really the perfect customer to them, as backwards as that sounds.

True. The perfect customer is the one they make the most money from.

[banditfist]

Congress's legislation made it harder for them to create the late charges and fees that they have been doing to the tune of billions....billions!
But, Congress gave them a year to implement the changes. During that time, they are adding these fees, jacking interests rates to 30%, and reducing the amount of credit extended.

This is exactly what should happen. The banks are finally acting like a responsible entity. Just because someone can fog a mirror doesn't mean they should have a credit card with a $20,000 limit.
But, if they can no longer take advantage of those who are not responsible with credit, then they have to get their revenues from those who are.

I have read that some businesses are revolting against the credit card company fees that they have to pay. This is especially true at convience stores. If someone charges a soda for a $1, the store's profit is 5 cents. But, the credit card companies are going to take 3 cents out of the profit from themselves. So the store only gets 2 cents.

I know that there are some old enough on this board to remember when it used to be cheaper at gas stations to pay with cash. A couple cent a gallon, back when gas was well under a $1. This is the reason why. This is also the reason that almost every gas station today has their own card. It is to avoid this fee.

[GREENBACK]

I realize they want to make money off "deadbeats" like me but it should be apparent that I'm far less likely to default than someone who is way over their head. They may want the person who only pay's miniums and pays late, etc. but what happens when that person stops paying completely.

I should redefine "perfect". I understand that I'm not what a cc company ideally wants. When I said perfect I was referring to my payment record not their view of me.