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115 Comments
- stoanhart, on 01/28/2009, -3/+51This is pretty disgusting, but Mr. Johnson keeps making one particular mistake: Mr. Johnson refers to himself as one of Amex's "best customers." The article claims that people like Mr. Johnson are the kind of customers any CC company would love to have. Mr. Johnson states that he is educated about financing and the credit industry, always makes his payments on time, and rarely carries a balance. This is exactly the type of person that the CC industry does NOT want to serve. People like Mr. Johnson are referred to as "deadbeats;" the CC companies make no money off of him at all.
I am also a deadbeat. My card gives me 1 reward point per dollar spent, with 15,000 reward points being worth $350 in air travel. That means every time I spend $100 on groceries, gas, and other essentials I would be buying anyways, I get $2.33 back. Credit card companies only charge about 1-2% to the retailer for processing a transaction, but they are giving me 2.33% back; if I don't carry a balance and thus pay no interest, they are actually losing money on me. Sure, I pay $110 per year for the card, but I easily put $15000 on it every year, and thus get $350 back. I'm sure they don't actually pay the full retail price for the flights I take, but at best they come out even. On top of that, for signing up I got 15,000 points free, which already ate their yearly fee for at least a year, if not two.
I suspect what was really happening here is that Amex was trying to cut back on deadbeats and was using some BS excuse as to why they were punishing Mr. Johnson. - northwatuppa, on 01/28/2009, -1/+38Some years ago, I paid off a lot of credit card debt accrued while going to grad shool. Then I canceled the credit card to control further spending and paid down a lot of other debt.
I thought I could get an Amex card to control my spending, since they required full payment each month. But Amex told me I didn't have enough active credit cards, didn't have enough outstanding loans and had paid previous loans off too fast. Everything I had done to get my finances under control and put my spending on a sound footing counted against me at Amex.
At that point, I figured Amex had gone a little crazy and never looked back. - DirtyVicar, on 01/28/2009, -1/+25The credit card company in question is American Express. Yes, they'll actually go up to bat with you if you have a dispute, but in my opinion that's all they've got going for them. Years ago I cancelled and was not able to get them to fix a problem they made on my credit report.
- anderzole, on 01/28/2009, -1/+21Not anything new.. If you had any idea what kind of research CC companies do on consumers and how they analyze their shopping habbits, you'd be mortified.
- kimbomitt, on 01/29/2009, -2/+21Successful black person finds he has worse credit because of the "type" of people who frequent the same places as him. This is just 21st century redlining.
- SRSco, on 01/29/2009, -1/+20I'm sure AMEX will be dropping this rule ASAP due to the bad press. The shame is I bet the AMEX employees taking these ridiculous phonecalls and trying to explain this nonsense to customers have been complaining to AMEX's Risk department about this for months.
I've worked with bank's risk departments. Its absurd. The turnover is ridiculous. You just get a bunch of math whiz ivy league graduates who want to climb corporate ladders. They get in and try to make up some formula to save the company from writeoffs with some absurd method like this one. They use some Six Sigma ***** to quantify their results. They fudge some numbers to show how much money they've saved the company, the ignorant Risk Managers above them love it and give them a promotion and then the bank has to deal with pissing off and losing a bunch of customers and more money than they saved. Then the process starts all over again with another young buckaroos straight out of grad school.
People who work in Risk Management are idiots. - ScienceDoc, on 01/28/2009, -2/+20American Express has become more ***** than usual lately. Don't use credit cards.
- inactive, on 01/29/2009, -1/+15I have cut back my American Express charges. I moved most of my monthly charges to other cards because American Express deeply cut all of the credit lines I had with them. When I questioned them about the cuts, they originally told me it was because of the Countrywide Loan that we hold (which is not a sub prime and we have 35% equity in the home). The next call back to a supervisor told me that it was a result of the minimum payments I was making on one of their cards where I hold a balance. I make the minimum payments on that card because the interest rates is fixed for life at 2.9%.
I typically spend $100-$150k in business expenses and pay them off monthly (no choice with Amex), but I guess this isn't enough to maintain a customer.
American Express can go to hell. Discover Card stepped in and raises the limits on all my cards and gained the business. - 380ppm, on 01/29/2009, -1/+12the guy in that article is not by account the type of customer that most major credit card companies want. He pays off his balance and thus, is classfiied as a deadbeat by the credit card companies because they cannot make outrageous interest off of him.
- inactive, on 01/29/2009, -0/+10Damn straight. CC is a tool, a 25 day interest-free loan (that's paid off in full each month).
- Y0tsuya, on 01/29/2009, -0/+8Give it some time. After getting hosed by legions of deadbeat borrowers declaring bankruptcy in the coming months, they'll be banging on your door to sign you up. At least they can generate steady income from transaction fees.
- scootinger, on 01/29/2009, -0/+8Amex is well-known for pulling shady ***** like this. They are notorious for their "Financial Reviews" where they will randomly disable your credit card(s), and will close the account unless you agree to let them audit your financial records. To hear them running (very likely racist) profiling like this doesn't really surprise me. I've never done business with Amex, and needless to say I don't plan on it.
- zeeistheman, on 01/29/2009, -1/+9I ate at a Chinese restaurant last night ... I am now Chinese
- wadd, on 01/29/2009, -0/+8I've cut back on American Express as well. Eventually, they'll lose me and all of my company's business and I will *never* go back. Companies that helped out in tough times will get all the business, and American Express (which seems to far more interested in my history with others than in my stellar history with them) will get none of it.
- Y0tsuya, on 01/29/2009, -2/+10People who pay their balances off every month don't need credit cards. They use it so they don't have to carry around wads of cash waiting to get robbed. For this convenience, the credit card companies charge a transaction fee for purchases. They should be happy and leave it at that. We don't need them, but they need us.
- lekjaz, on 01/29/2009, -5/+12Credit cards are legalized usury and an invitation to be anally raped. The credit card companies want you to believe that credit is "necessary" and "there for you in an emergency" but the reality is that people use it as a revolving line of credit for every day purchases. I haven't had a credit card in over 10 years. If I can't buy it with cash using the check card issued by my bank, I don't buy it.
- dantelephoneman, on 01/29/2009, -0/+7I am sorry, but your are misinformed like alot of people and I was at one time. Credit card issuers love this type of customer, they are actually called "Revolvers". The issuing bank gets a almost all the discount rate the merchant pays. They like for some customers to carry a balance every once in a while, but not a long time. They like you to make lots of new purchases. You may think your getting back 2.3%, but your issuing bank is also going to slap you with a fee to buy the ticket ($20-$75) and they are also getting the ticket for a reduced amount plus a commission. The money the bank makes on interest is gravy, the real money comes from transactions.
- Myztry, on 01/29/2009, -0/+6While they love people who max their cards and as a result pay ridiculous interest on a revolving loan that never ends, they also like people who pay off their spends.
BUT with those that pay of their cards, it's important (to the bank) that you keep turning over the transactions.
They may only get 2% (or so, higher for small retailers - lower for large retailers) as the merchant's fee, but it's per transaction. Not per annum.
If you turn over $500 per week on the card you will end up paying 104% (52 x 2%) per annum on that $500 temporary balance. And the bank never carries more than $500 risk at a time with you. By the end of the year they are essentially just lending your money back to you.
Many people end up carrying over some balance on their card, but that's just gravy on top. - kyravon, on 01/29/2009, -0/+6Mastercard almost stranded me in Hiroshima, Japan because they didn't think I should take the train twice in 1 day - so they rejected my bullet-train return trip ticket price. (and nearly all ATMs in japan won't take my ATM card).
I called & told them I'd be in Japan, please authorize all purchases.
Japan is one of the safest/crime free places.... it's not like there was a high chance someone had stolen my card to take the train back where I came from!
jerks! - jasonhoutx, on 01/29/2009, -0/+6As Dave Ramsey would say: "Debt is Dumb, don't worship at the alter of FICO"
I got out of debt and got rid of credit cards and haven't looked back - xero69, on 01/29/2009, -1/+7Discover/Novus doesn't seem to have any issues with my shopping at Wal-Mart and other discount stores. If Amex pulls this BS with my personal account I'll drop their cards like a bad habit. Unbelievable that an upstanding businessman with a credit score almost identical to my own gets this kind of treatment.
- Chompy, on 01/29/2009, -0/+5My last company gave me an AMEX card and I never touched it because of crap like this. Anyone who believes that a credit card brand imparts "prestige" is an idiot anyway.
- 2uantuM, on 01/29/2009, -0/+5how about a mortgage?
- Chompy, on 01/29/2009, -1/+6I hope you've got enough cash to pay for your car and house.
- Spuy767, on 01/29/2009, -1/+6My penis is 9 inches.
- krellor, on 01/29/2009, -0/+5I have one credit card through my credit union and I buy everything with it. I pay it in full every month, and pay no interest. Like the above poster I get 1 point per dollar spent, and I get it for things I would be buying anyway. I never spend more than I have in the bank, and don't make big splurge purchases. With the points I get back I am able to splurge on things that I otherwise wouldn't spend money on, such as a recent hot air balloon ride. I am one of those customers that they lose money on, and as long as they offer me rewards I will continue to put all of my essential purchases on the credit card. Unfortunately most people poorly manage credit and over extend themselves buying things they don't really need.
- splorpdotorg, on 01/29/2009, -1/+5The only times you should ever cancel a credit card are:
1) They're going to apply an annual fee
2) They're going to cancel it - always cancel before they do and advise you want it noted that the account was closed by you
Otherwise, you want to keep your existing cards. The credit bureaus want to see as long a credit history as possible and canceling cards may impact that history. Also, you want to show that you can manage your credit. Never exceed more than 50% of your total available credit. Never pay late.
Remember: available credit and used credit are not the same thing. - sasper, on 01/29/2009, -0/+4Plus, Amex charges about 5% transactions fees to retailers, hence the reason they are not accepted at a lot of smaller mom-and-pop stores.
- Etobian, on 01/29/2009, -1/+5If Amex has a problem with Wal-Mart, why don't they just stop allowing use of their cards there, instead of underhandedly allowing it and punishing the credit holder for using the card?
- rumblestrut, on 01/29/2009, -3/+7Oh for heaven's sake.
I stopped using/closed/cut up the last of my credit cards two years ago. - QubitTarutaru, on 01/29/2009, -1/+5Don't get a credit card to begin with. Simple as that!
- wadd, on 01/29/2009, -0/+4Where in my comment do you read I've cut back my spending? I've only stopped using my amex.
- wedges, on 01/29/2009, -0/+4i was actually denied a basic capital one card recently, even though my score is pretty good (higher than the guy in the "i'm thinking of a number" commercial who seems to be really cocky). my first (and only) late credit payment was in back in 2004, when i was in college, i pay my current card balance to $0 each month, and my current job pays well. for some reason i seem high risk, so i wouldn't be surprised if profiling the places i shop and hang out has something to do with that.
- maxlightz, on 01/29/2009, -0/+4this is nothing new. in the leasing industry we profile customers by what industry they are in. restaurants, construction, cleaning, landscaping, and trucking are higher risk industries because so many more pay slow and default entirely. conversely, medical, franchise, and industrial companies typically perform better and aren't as strict to qualify for approval
it's due dilligence and we should all respect the fact that these credit models are put in place to protect lending institutions from defaults that literally break the banks - 380ppm, on 01/29/2009, -1/+5they dont do anything for free. they charge the merchants every time their card is used. How is the gentlemen in that article a credit risk?
- SRSco, on 01/29/2009, -0/+4Remember how I said I work with people, things and companies like this? I know what I'm talking about.
- BrandonEagan, on 01/29/2009, -0/+4It's not about them getting "your" money from them. You already took their money when you applied for their card and used it to rack up an unsustainable, greedy lifestyle. They just want it back.
They don't mess up your credit report, you do, by failing to honor your commitments. The article doesn't talk about changing someone's credit report, just changing how much they choose to lend someone based on scientific predictions about credit risk.
As for the "hard assets" comment, you forget that there is such a thing as wage garnishment. When you steal money by borrowing it then trying to run off, there are remedies that go beyond seizing assets. - Chompy, on 01/29/2009, -0/+4Dude, next time get the JR Rail Pass; two weeks of all-you-can-ride Shinkansen and local JR lines for about $200.
- haydesigner, on 01/29/2009, -0/+4Here, let me fix that for you:
"When they mess with your credit report, and if you have little hard assets (and thusly never want to be able to get any hard assets ever again), well then... just don't pay your bills. They don't deserve your money anyway." - scootinger, on 01/29/2009, -0/+4You probably won't be saying good things about them anymore when they decide to make you do a "Financial Review."
- pappyblueribs, on 01/29/2009, -0/+4If you or I were running a credit card company, why should we have Kevin Johnson as a customer? He doesn't make us any money! He's a waste of time for the credit card company! Get me some people that carry monthly balances, asap!
- BrandonEagan, on 01/29/2009, -1/+5Krellor, they don't lose money on you. Credit card companies, contrary to popular belief, aren't looking for "bad" customers to get interest and late fees from. They make their money from transaction fees charged merchants. They get between one and five percent of every purchase you make. Think about how much that adds up to! They are doing just fine.
Congrats on being a responsible, intelligent credit card user! - skc0der, on 01/29/2009, -0/+4Likewise, successful white people who frequent places that black people go (KFC, Church's Chicken) will have worse credit. This is just 21st century redlining.
- BrandonEagan, on 01/29/2009, -2/+5Dude, it's stupid to not use credit cards. Just use them responsibly.
- BrandonEagan, on 01/29/2009, -1/+4It's not just Amex. What you did were bad ideas that give you a bad credit record with any company.
There are two types of borrowers:
1. Those who can manage debt responsibly (as demonstrated by actually using debt responsibly)
2. Those who can't manage debt responsibly (as demonstrated by failing to manage debt at all, or by using it irresponsibly) - BrandonEagan, on 01/29/2009, -0/+3I think the commenters before me have explained it well. Stoanhart, you're mistaken. Your bank makes plenty of money off of you and loves people who pay off their full balance! Your comments just reveal an excessively cynical view of the corporate world!
- jmnormand, on 01/29/2009, -0/+3no your $0 balance has everything to do with it. if you have cards that have maintained no balance then another bank has no incentive to give you a card.
- BrandonEagan, on 01/29/2009, -1/+4I'm afraid you're confused. Although some banks make a good chunk of money off the interest and late fees incurred by their "bad" debtors, most banks make most of their credit card money from their "good" debtors. Remember, they get 1-5% of every purchase you make as a transaction fee paid by the merchant.
- Eorster, on 01/29/2009, -0/+3Thanks for all the feedback on how crappy some of these companies are.
- wedges, on 01/29/2009, -0/+3i think i need to rephrase. there is constantly a balance. currently it's ~$300. but before the 1st of February i'll give them a bunch of money.
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