Has anyone had his credit limit lowered for purchasing from "lower end" stores?

[joshuagraham]

Evidently AMEX is lowering the credit limits of folks who purchase too much stuff at places where folks who also shop there have a poor repayment history.

http://www.motherjones.com/kevin-drum/2009/01/todays-two-minutes-hate

"Other customers who have used their card at establishments where you recently shopped have a poor repayment history with American Express."

[keepmine]

Keck Yea!

http://www.nytimes.com/2009/05/17/magazine/17credit-t.html?pagewanted=all

Scroll about halfway down to where it talks about J.P. MArtin-the math loving executive.



The exploration into cardholders’ minds hit a breakthrough in 2002, when J. P. Martin, a math-loving executive at Canadian Tire, decided to analyze almost every piece of information his company had collected from credit-card transactions the previous year. Canadian Tire’s stores sold electronics, sporting equipment, kitchen supplies and automotive goods and issued a credit card that could be used almost anywhere. Martin could often see precisely what cardholders were purchasing, and he discovered that the brands we buy are the windows into our souls — or at least into our willingness to make good on our debts. His data indicated, for instance, that people who bought cheap, generic automotive oil were much more likely to miss a credit-card payment than someone who got the expensive, name-brand stuff. People who bought carbon-monoxide monitors for their homes or those little felt pads that stop chair legs from scratching the floor almost never missed payments. Anyone who purchased a chrome-skull car accessory or a “Mega Thruster Exhaust System” was pretty likely to miss paying his bill eventually.

Martin’s measurements were so precise that he could tell you the “riskiest” drinking establishment in Canada — Sharx Pool Bar in Montreal, where 47 percent of the patrons who used their Canadian Tire card missed four payments over 12 months. He could also tell you the “safest” products — premium birdseed and a device called a “snow roof rake” that homeowners use to remove high-up snowdrifts so they don’t fall on pedestrians.

Testing indicated that Martin’s predictions, when paired with other commonly used data like cardholders’ credit histories and incomes, were often much more precise than what the industry traditionally used to forecast cardholder riskiness. By the time he publicized his findings, a small industry of math fanatics — many of them former credit-card executives — had started consulting for the major banks that issued cards, and they began using Martin’s findings and other research to build psychological profiles. Why did birdseed and snow-rake buyers pay off their debts? The answer, research indicated, was that those consumers felt a sense of responsibility toward the world, manifested in their spending on birds they didn’t own and pedestrians they might not know. Why were felt-pad buyers so upstanding? Because they wanted to protect their belongings, be they hardwood floors or credit scores. Why did chrome-skull owners skip out on their debts? “The person who buys a skull for their car, they are like people who go to a bar named Sharx,” Martin told me. “Would you give them a loan?”

I've read several articles over the years about this guy. Can't put my finger on one at the moment but, people who use cc's at adult entertainment shops, tatoo shops and, for marriage counseling are also poor credit risks per his findings.

[IBroke]

Evidently AMEX is lowering the credit limits of folks who purchase too much stuff at places where folks who also shop there have a poor repayment history.

http://www.motherjones.com/kevin-dru...o-minutes-hate

Oh..wait...AMEX - that doesn't surprise me.

I had a business-card with them 10 years ago and one day, a guy called me and demanded full access to my business finances. He even had a problem because the recently added visitor-counter on my website was "too low". When he told me I was "required" to grant him full access to all my business-records, I told him he must be dreamin' and closed that account ASAP - the end of my business relationship with AMEX - once and for all.

This kind of arrogance is why I hate companies like AMEX and BOA. They believe their name entitles them to virtually anything.

[TXskyblue]

If it's statistically valid, and I believe it is, then I don't see the problem. If I were AMEX, I'd do it too.

We're free to use other credit card issuers.

Just my opinion.

[bcohen]

Other than AMEX, I have not heard of any credit card companies doing this. I do recall reading a newspaper article about this practice--of AMEX cutting peoples' limits if they shop at certain stores, or if their spending habits change--back in 2008. So this is old news.

[beachmomoc]

I think we will see more of this. We try to be very careful where we use of debit Mastercard and Visa these days. When we go to Walmart or the mainstream grocery stores, we always use cash. Trader joe's, AJs, Whole Foods and so on we use the cards. Everything is tracked and used to make judgements about you these days.

[IBroke]

I think we will see more of this. We try to be very careful where we use of debit Mastercard and Visa these days. When we go to Walmart or the mainstream grocery stores, we always use cash. Trader joe's, AJs, Whole Foods and so on we use the cards.

Darn it - Trader Joe's doesn't accept my Walmart credit-card. Hopefully, I won't get penalized for using my Walmart-card at Walmart...

[beachmomoc]

Darn it - Trader Joe's doesn't accept my Walmart credit-card. Hopefully, I won't get penalized for using my Walmart-card at Walmart...

I know...that sucks! Imagine if they did and if they did a Walmart price match on the TJs products...a girl can dream!

[IBroke]

I know...that sucks! Imagine if they did and if they did a Walmart price match on the TJs products...a girl can dream!

Yeah, I know..

Usually, I'd totally understand if financial institutions use statistics to determine risks - after all, the entire credit-scoring system is based on statistics. If you know how the system works, you can appear much more "credit-worthy" than you actually are (and the opposite, if you are rich but clueless). Been there done that...

Now, this "shopping-rating", however, can be seen from different angles. I love shopping at Walmart (not because I'm attracted by the "upper level environment" - I simply enjoy getting the same brand products for less $$ than my local ordinary grocery store). So I'm not necessarily doing this because I can't afford shopping there (I still go there a couple of times/week) - but isn't it more responsible to save $$ I don't have to spend? And THAT'S the problem I have with this statistic.

Let's compare that to carrying high balances on revolving accounts. You get a lower score for doing so - and that's fine with me. After all, it makes sense. Why would you carry high balances if you could otherwise save the interest by paying your accounts off - which is responsible behavior. But shopping at specific stores to save money is irresponsible and a risk? I don't know. Where does it end?

When do we start race- and age-profiling? Or is this already a way to do just that - just over a hidden path? What ethnic group(s) is/are mostly shopping at Walmart? I think I know the answer...