Beware of the Newest Credit Card Game

ABC’s Good Morning America aired an interesting segment today about credit card companies that are looking at the places people shop to determine credibility.  So for example, if the credit card company’s data shows that a high percentage of people who shop at XYZ Store don’t pay their bills on time, some companies are using this as a reason to significantly cut customer’s credit limits without warning. 

The subject of the segment was a man named Kevin Johnson, a 29 year old who owns a PR Firm in Atlanta and has stellar credit (a 764 FICO score).  He had been a loyal American Express user when he received a letter saying his credit limit was lowered from $10,800 to $3,800.  Ken says he rarely kept any balances on his credit cards and has always paid on time.

This new twist is called “behavioral analysis” or “behavioral scoring” and it seems quite unfair.  Apparently this is just another way for credit card companies to assess their risk during the recession.  It’s a bit strange to me, especially for those who are trying to save money by shopping at a discount store or for those who have always been loyal paying customers. 

The other weird part of the story is that American Express received more than $3 billion in taxpayer money from the “Troubled Assets Relief Program,” yet they are choosing to cut off great customers like Kevin Johnson.  It is the Kevin Johnsons of the world who are paying the taxes to fund thse bailout programs…

I guess the moral of the story is that in a battle between a single consumer and a huge credit card company, the credit card company is going to win.  During times like these, we as consumers need to remember that we can’t count on using our credit card company’s money to get by.  They have the right to revoke our privileges at any time.

Read the whole story here for more details.