Are Your Credit Card Rates and Spending Limits Determined by Where You Shop?
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 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 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.
Whichever card you select depends on your lifestyle and credit card use, and whatever rewards program you eventually choose, be sure you understand how the scheme works before you sign up.
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