Credit Card Companies’ Questionable Practices

Have your credit card rates been hiked for no apparent reason? Or maybe your credit limit’s been reduced, or one of your accounts has been closed. If so, it’s possible that you were a victim of a form of profiling that in effect punished you for your prudence.

Suppose, a couple of years ago, you had responded to the recession by being less extravagant. Maybe you bought some casual clothes from the sorts of store you wouldn’t normally have frequented during better times. Perhaps you purchased a lovely antique gift from a pawn shop instead of your usual jeweler. You might even have spotted an ad for retread tires, and chosen those for your second or third car; the one you only use around your neighborhood anyway.

Well, many would say, good for you. If only everyone had been that responsible the country might never have gotten itself into such a mess.

Credit Card Use Monitored

Many people might have said that, but not some bankers. According to a new report from the Federal Reserve, at least six credit card companies have in the last few years been spying on their customers’ shopping habits, and far from applauding such examples of responsible spending, they have been regarding them as a sign of troubled finances, and thus lower creditworthiness.

And so they used such prudent spending as an excuse to hike credit card rates, slash credit limits, and/or close accounts.

Losing Credit Cards

Of course, it’s not just changes in credit card use that can result in a closed account. Yesterday’s Los Angeles Times included a letter from a reader whose husband had recently lost one of his credit cards on the grounds, his bank said, that “the account does not have a high enough credit limit”. And that was in spite of payments always being made on time, and usually clearing the balance in full. Go figure.

Credit Card Rewards Taking Off

Some people want just one thing from their credit card rewards program: free–or very nearly free–flights. If you’re one of them, you’d have been interested in a feature in the San Francisco Chronicle last week, which set out to identify the “best frequent flyer credit cards”. Depending on your needs, there were two outstanding recommendations in the article, both of which were American Express products.

The first recommendation was for an airline-specific card, the Gold Delta SkyMiles® Business Credit Card from American Express OPEN. Right now, the first year’s annual fee is being waived. You have to pay a $95 annual fee each year after the first, but you’ll get a free $99 companion ticket with every renewal, so that takes out the sting. You’ll get 20,000 bonus miles with your first purchase, then two miles for every eligible dollar spent on qualifying Delta and Northwest flights, and one mile for every other eligible dollar spent.

According to its web site, the Starwood Preferred Guest® Credit Card from American Express allows you to “redeem the Starpoints® you earn for nights at 940 Starwood hotels and resorts in 93 countries, or fly on hundreds of airlines with no blackout dates.” And it has a lower annual fee ($45), which again is waived for the first year.

Which you prefer will depend on your lifestyle and credit card use, but whatever rewards program you eventually choose, be sure you understand how the scheme works before you sign up. Not every offer is as good as these, and some can contain nasty surprises.

Most popular / best credit cards according to IndexCreditCards.com visitors:

  1. 1. Discover® More Card – 0% APR on balance transfers for 12 months & 6 months on purchases, 5% cashback bonus in popular categories, up to 1% cashback bonus on all other purchases
  2. 2. Chase Freedom Card – 0% Intro APR and no Annual Fee, 5% bonus cash back in popular categories , 1% cash bank on everything else
  3. 3. Citi® Platinum Select® MasterCard® – 0% on purchases & balance transfers for Up to 18 months, APR as low as 9.99% variable. $30 statement credit.
  4. 4. Blue Cash® from American Express – Earn up to 5% cash back on gas, groceries and drug store purchases, and up to 1.5% back on all other purchases, no annual fee, fast approval under 60 seconds
  5. 5. Slate SM from Chase – 0% Intro APR, Now with Blueprint, patented fraud protection

  6. 6. American Express® Gold Card – 10,000 American Express Membership Rewards bonus points when you use the card for at least $500 in purchases within the first 3 months.
  7. 7. TrueEarnings® Business Card from Costco & American Express – 4% cash back for annual gas purchases up to $6,000, 3% restaurants, 2% travel, 1% everywhere else, 0% APR on purchases for first 6 months

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