This is the first thing I’ve posted here of a personal nature. It’s a pity it has to be on a subject like this.
All of us, at least all of us in the United States, have been hearing about the Banking Crisis, and the Economic Crisis, and how it’s moving from Wall Street to Main Street. Well, I guess it’s hit my street, but not in a way I would have expected.
On April 7, 2009, I received a letter in the mail from Bank of America, about my credit card. It seems that they had decided to cut my credit limit in half, to $500. The letter said this was being done not because of any problems I’d had with Bank of America, but because of problems they saw in my credit report.
I thought, “Well, Ok, it’s their card, if they want to be cautious that’s ok. This will all resolve itself in a year or so.” I had been out of work for a few months, and although I had returned to work in February, I thought they might have seen a late payment or two. No big deal.
This was an issue only because I was using that card to rent a car: my car had finally died, and I got a great rate from Enterprise Rent-A-Car, and am being paid enough to afford this. Enterprise had wanted $500 to be free on the card, and with the new limit, I paid the $25 balance I had outstanding and called to ask Bank of America if they could put in a temporary $25 credit line increase until the payment posted in a day or so.
They told me that they could not, since they were cancelling the card outright. It seems that their computer had decided to cut the credit limit, but the very nice human I spoke to on the phone decided to just close the account instead.
Note that this had nothing to do with my experience with Bank of America. I had no late payments or any other problems with them. They closed the account because my ‘”Credit Profile” (not even the full credit report) showed late payments to other creditors. .
Yes, if you’re out of work for three months, a late payment or two is not unlikely. Apparently, it is now a reason to close an entirely different credit card.
I considered this to be an isolated case, so I called Enterprise and told them we’d be switching cards to American Express. I’ve had an American Express Card for ten years and counting, and have kept that card pristine – I hardly used it, so it had almost no chance of having any problems. So, I paid $600 to American Express to get enough room on the card for Enterprise to use.
The following day, American Express closed my account, for the same reason as Bank of America. Ten years and stop counting.
As I see it, the problem is that:
- Due to being out of work for a while, I missed a few payments on two credit cards. Those have since been brought up to date, now that I’m working again.
- In both cases, my balance on the card was less than half the credit limit. This means that, even if I decided to be a deadbeat and not pay what I owed on these cards, they wouldn’t lose much money (of course, I pay what I owe, so that’s not something they’ll ever learn).
- I’ve never had, or needed, a high credit limit on these cards. This means that losing me as a customer isn’t a great loss for these companies.
So the bottom line is that some large companies, who would ordinarily not act like cowards, have begun to do so, at least in the case of small customers like me: they seem to be deciding that there’s more downside risk of keeping me as a customer, than there is upside potential of me being a better customer – they felt they had a better chance of losing money by keeping me as a customer, than they had of gaining money by keeping me as a customer.
So, with the equation changed, I’m back to being in the cash-only economy, at least to an extent. I’ll be taking a cab to work tomorrow, at a cost of more than half a week’s car rental; and I’ll be looking to rent a room near work, probably for a cost of more than twice what it would cost to rent a car.
I’ll be working, though, and I’ll be alive to complain about this, and to anticipate the tax refund I’ll be receiving next year: I’m going to have so much deductable commuting expense.
BTW, I have more props for Enterprise: not only do they pick you up and drop you off, but when dropping me off today (after I returned the rental car), the manager there suggested that I rent from them over the weekend for a special rate. Since it will only be a weekend rental, they will only need to use a credit card with $300 on it. That, I still have, so I’ll probably be driving one of their cars this weekend. The contrast between Enterprise on the one hand, and Bank of America and American Express on the other hand, is revealing.
EDIT: I don’t feel so bad anymore – they’re doing it to everyone, even people with good credit. See http://moneycentral.msn.com/community/message/thread.asp?board=ConsumerActionForum&threadid=1080789.