Results 1 to 6 of 6

Thread: Credit Cards

  1. #1

    Default Credit Cards

    I just got off the phone with my bank manager. He said that they are canceling credit cards with no recent usage or balance. He also said that may change after the first of the year. They may also lower credit limits on cards with low usage or balances.

    It makes it a double hit. Pay off your credit cards but keep them for emergency use and they may be canceled. Keep a high balance and you get hit for the interest. Also, your credit score will go down if cards with zero balance get canceled because part of the score is the percentage of total available credit to current percentage of that available credit being used.

  2. #2
    Queen of the Forum
    Array
    KristineS's Avatar

    Join Date
    Aug 2008
    Location
    Traverse City, MI
    Posts
    4,732
    Blog Entries
    1

    Default

    I'm guessing a lot of the credit card companies are scared that lots of card holders are going to default on their payments. With the current economic climate, I'd be surprised if it didn't happen. I'm guessing the credit card issuers are trying to take steps to limit the damage.

    Although you'd think the people who had cards and didn't carry balances would be less risky.

  3. #3

    Default

    The problem as I see it is that people with little or no usage are not generating money for the credit card companies... however they all have a line of credit which the credit card company keeps open... perhaps the credit card companies are struggling to maintain this line of credit for everyone given the problems associated with the financial markets... thus they close the accounts that are not being used, so that they can fund the ones being used...

    Consider this also... the credit card companies / banks here in Australia have as yet not passed on any real interest rate cuts to credit card customers... these people with large debts are therefore paying what can only be described as loan shark type interest rates... and it's all legal... whereas if the interest charged was inline was rates cuts... most people with debts would have more money to pay the debt down as well as on other things... thus helping boast the economy as well as helping themselves.

    Just a thought
    Steve Cartwright
    FX Digital Pty Ltd
    Website Design | Promote your Website | Rent a Website

  4. #4

    Default

    What I'm doing, and I've had a couple of them recently, is taking advantage of very low credit card rate offers. The current one is to move 2k to a 1.87% APR through Oct 09. There is a $100 fee to move the funds. I haven't done the math, but that has to be better than 28% interest on a high interest credit card. This is on the bank card above, so I don't think they can cancel me as long as I have a balance.

    I'll keep activity on my other high interest rate cards going. I guess I may need to carry a balance on them and activity not to be canceled and I need the backup credit. Not sure what else to do?

    Seems like you need to be Donald Trump right now or you won't get credit (or pay through the nose for it).

    My credit score is 730 BTW. That's not that bad according to the bank.

  5. #5
    Registered User
    Array
    orion_joel's Avatar

    Join Date
    Aug 2008
    Location
    Brisbane, Australia
    Posts
    1,242

    Default

    The way that i see it is that the whole dynamic of how the Credit and Banking Industries in Australia and US work are completely different.

    In Australia, I do not believe that any of the banks are worried in anyway about the current financial climate. They would i believe be leaving credit card interest rates alone purely because they can get away with it and it does help with their profits. I highly doubt that in the near future any one of the banks in Australia is going to start pulling in Credit card limits.

    What i would imagine may be driving the change in the US, is the big change that is happening, with people loosing jobs, and everything else that is going on. Then it would be in the best interest of banks to cancel or lower limits on cards that are not used often. Because if someone lives comfortably on their wage, without using their credit card, and looses their job but has no saving's then the credit card will be the first place they turn. However depending on how long and how bad the economy gets, what chance does the bank then have of recovering that money, or even the minimum payment when they are expecting to.
    Joel Brown
    My Travels

  6. #6
    Mr. Tax Man
    Array
    Join Date
    Aug 2008
    Location
    Rhode Island
    Posts
    1,336

    Default

    Donald Trump probably has horrible credit based on his past bankruptcy. Bill Gates and Warren Buffett would probably have excellent credit.

    Your best bet with keeping credit cards active is to use it at least once annually or for certain types of purchases. My highest interest card (coincidentally the highest credit limit as well) is the first card I received, but I hardly use it. I purchase books, and I pay no interest on purchases up to $250.00 on the card. So I buy all my books for the trimester cheaply and pay no interest and take my merry time paying it off. By the time the trimester is over, I'll sell them and can use the cash to pay that card off. I also put my new books on that card as well. That's the only way I use that card. They have yet to collect a penny from me in the 3+ years I've had that card. (Only one more full-time academic year after this before I have my MBA! Bachelor's this May, woo-hoo!)

    The triple whammy with having your account closed by the bank is your temporary reduction in credit score. Instead of $100,000 in available credit, you may have $90,000 now. And if your outstanding balance was $50,000 combined, then your debt-to-available-credit ratio went from 50% to 55%, which could also decrease your credit score further.

    SteveC -- you're correct about not generating money. Credit card companies tend to hate you and entice to collect from you by increasing your limit and reducing your interest rate so you feel "happy" with some rate so they can collect something. If you have no transactions, they have unused credit that doesn't generate revenue. Nobody would want inventory staying on the shelf for a year either, so that's why they'll get rid of those they can't profit from.
    Small Business CPA
    "A tax loophole is something that benefits the other guy. If it benefits you, it's tax reform."

Bookmarks

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •