My credit card company is changing the rules.

[Porsche-O-Phile]

I heard that AmEx was simply not approving ANYONE at this time - doesn't matter if you're Don Trump, you're not getting one. Supposedly they have a blanket "reject all" policy in place right now.

At least that's what I've been told - may or may not be true.

[nynor]

wow, i had no idea this was going on with CC's. we haven't seen anything about our credit cards.

[fingpilot]

This morning's papers are talking about even 'where' you use your cards can affect the interest rate. Auto repair shops; deep discount stores; and medical supply outlets.

One of the many 'interesting' things in my last (and I do mean LAST) Citibank letters said that they can now make a credit descision based on the word 'cancer' showing up in any transaction. That is no longer considered 'discriminatory'. I had called after a series of letters about rate changes and terms modifications, and then asked what would happen if I donated to the American Cancer Society with my Citi card. They (with a straight face) said, yes, that word would prompt a review of my rate.

Needless to say, Adios Citibank.

[jyl]

Companies have a huge amount of data about each of us. They are increasingly able to aggregate and analyze it, and generate scoring models to predict our future behaviour from past and current datapoints.

Suppose your charge cards used to be used at Nordstroms and expensive restaurants, but now are being used at Ross Dress For Less and cheaper restaurants. Probably a clue that you are under some financial pressure, and thus are a higher financial risk.

As different industries exchange data, an even more detailed picture of the individual consumer can be created.

Suppose that, in addition to the switch from Nordstroms to Ross, your car payments are now being made to Hyundai rather than BMW, you've dropped most of your magazine subscriptions and downsized your cable TV account, no longer vacation in Europe, and the median home price in your area has dropped -25%. The industry that you work in is aggressively laying off. You look like an even bigger financial risk.

Upon seeing this data, it might be logical for your credit card company to lower your credit limits, even terminate your account. Why wait for you to default? What, you vow to never do business with them again? They can simply create a second brand to pick up your business later, when you score better.

Banks have got to be disappointed in the traditional FICO scoring, since even their highest-FICO customers are defaulting at increasing rates now. I could see them using more and more of this super-personalized data in an attempt to figure out what you are going to do, before even you know it.

AFAIK, some categories of data are legally off-limits. Medical records, tax returns, bank and brokerage accounts, payroll records. Imagine if they were also available. Lose a bunch of money in the market, get laid off, or be diagnosed with a serious disease - the next day all your revolving credit is cancelled and you find yourself blacklisted at every finance company.

1984, indeed.

[jyl]

That said, I haven't had any issue with my cards (have had the accounts for 10-15 years) and recently applied for a Chase/United card which arrived a week later, no fuss no muss. So I guess its not quite 1984 yet . . .

[Porsche-O-Phile]

I agree with you John - it's one BIG reason to use cash. However, despite all the cross-linked databases and analysis and modeling and supposed risk analysis that goes on, finance companies/credit lenders still are ASTONISHINGLY stupid with respect to extending credit. It's mind-boggling to me how they can collect all this data, spend a fortune on IT guys and programmers and in developing/maintaining the most sophisticated cross-linked databases in the world (aside from maybe the NSA) and STILL stupidly decide to extend credit to schlubs that are hopelessly underwater and write mortgages to anyone who can fog a mirror.

Somewhere up the chain of command, logic and sound fiscal modeling gets trumped by gut feeling and very stupid/short-sighted policies. This is ultimately to the consumer's advantage (if you're out to take advantage of someone). The big companies just are TOO big. The right hand doesn't know what the left hand is doing half the time. I literally paid off a personal loan a few months ago (with one of these big lenders) with one of their own subsidiaries' "introductory rate" promotional programs that dropped the interest rate to essentially zero. I then paid it down over several months and transferred the remaining small balance to another credit account with a near-zero interest rate. On a $10,000 loan, they made a grand total of something like $40 off of me over a year. And most of that was in paperwork fees. I think they made something like $12 in interest the whole time - all because they were dumb enough to let me pay themselves off with their own money.

Yes, they keep a lot of records, but they also do some amazingly stupid things sometimes.

[nynor]

my 'friend' has declared bankruptcy twice in the last 15 years. still, he has credit cards and was able to get a mortgage on a $200K house. his wife doesn't work and he makes in the neighborhood of $45K/year (i am pretty sure i am being generous there). it makes no sense to me that he gets credit/mortgage.

[jyl]

Originally Posted by Porsche-O-Phile

I agree with you John - it's one BIG reason to use cash. However, despite all the cross-linked databases and analysis and modeling and supposed risk analysis that goes on, finance companies/credit lenders still are ASTONISHINGLY stupid with respect to extending credit. It's mind-boggling to me how they can collect all this data, spend a fortune on IT guys and programmers and in developing/maintaining the most sophisticated cross-linked databases in the world (aside from maybe the NSA) and STILL stupidly decide to extend credit to schlubs that are hopelessly underwater and write mortgages to anyone who can fog a mirror.

Somewhere up the chain of command, logic and sound fiscal modeling gets trumped by gut feeling and very stupid/short-sighted policies. This is ultimately to the consumer's advantage (if you're out to take advantage of someone). The big companies just are TOO big. The right hand doesn't know what the left hand is doing half the time. I literally paid off a personal loan a few months ago (with one of these big lenders) with one of their own subsidiaries' "introductory rate" promotional programs that dropped the interest rate to essentially zero. I then paid it down over several months and transferred the remaining small balance to another credit account with a near-zero interest rate. On a $10,000 loan, they made a grand total of something like $40 off of me over a year. And most of that was in paperwork fees. I think they made something like $12 in interest the whole time - all because they were dumb enough to let me pay themselves off with their own money.

Yes, they keep a lot of records, but they also do some amazingly stupid things sometimes.

A model that is "sophisticated but dumb" is only as good as the data it uses. If you feed such a model data from the past 20 years (1985 to 2005), it will give you predictions that won't necessarily hold up when the economy does a 1981 or a 1974 or, gulp, a 1933. This is certainly the case for financial asset valuation models, and I imagine is also the case for credit scoring models.

[TerryH]

Originally Posted by jyl

snipped...... Upon seeing this data, it might be logical for your credit card company to lower your credit limits, even terminate your account. Why wait for you to default? What, you vow to never do business with them again? They can simply create a second brand to pick up your business later, when you score better.

From this thread, I see many of us just seeing 200-300% interest rate hike. Pure greed.

In my entire credit history, I've never had a card cancelled other than by me or my limit lowered. Credit card rates are always subject to adjustments, but Capital One is abusing that right to the nth degree.

[The Gaijin]

Some people would rather suffer a death of a million cuts than be late on a electric bill - others will walk away from bills, a house, loans and never look back. Figure than behavior out and you would make a bundle..

[nynor]

Originally Posted by The Gaijin

Some people would rather suffer a death of a million cuts than be late on a electric bill - others will walk away from bills, a house, loans and never look back. Figure than behavior out and you would make a bundle..

personal responsibility.