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Why – After 29 Years – I’m Cutting my Favorite Credit Card in Half

By mistake, I underpaid a credit card bill by $49. What the bank did next was so insulting I had no choice but to say ‘see ya’ to an account I’ve had for 29 years.

After messing up my payment amount, a credit card I've had for 29 years cut my credit line in half, so I'm cutting it up.Had I tried to write this post three months ago—when my anger over a credit card company slight reached full boil—it would’ve turned into a train wreck. Now that I’ve had time to cool off and reflect, I’m giving it my best shot, because my story serves as a cautionary tale about using credit wisely. It’s also a tangible sign how much the credit card industry has changed, not necessarily for the better.

The story of this particular card goes back to 1985. It was an era of bad mullet haircuts and frizzy “Flashdance” perms; of cringe-inducing dance routines in John Hughes “Brat Pack” films; a time before widespread Internet use and smartphones. I scored the card as a college student, and over time did my best to live up to the privilege of holding it.

In later years, I got into some bad financial scrapes. I gave up quite a few credit cards after amassing $30,000 in debt. But this card felt special, maybe because it was the first I’d obtained. I paid its bills on time, even when I could afford to do little else in life.

Nearly 30 years is a long time to have a relationship with one creditor, and it felt to me almost like a marriage. I sought always to play by the rules, honor my commitments and do the right thing. Then the marriage hits a rocky spot when your significant other digs their heels in. They start behaving in a no-compromise way that catches you totally off guard. Now you have to decide if the relationship’s worth saving.

Here’s what happened:

I hit a rocky patch in my finances in September; my balance on this card went up due to travel. I made my minimum payment on time, just not in the right amount. I received an email two weeks later informing me that my account was past due by $49.06. That same day, I phoned in a $50 payment to the creditor and apologized for being late.

Within hours, I was informed by the creditor that my credit line of $12,000 was being whacked in half to $6,000. I appealed to the call center, which was no help. I asked to talk to a supervisor to have my credit line restored, and that didn’t help either. Then I took my case up the corporate ladder and tried to explain:

“I’m not a fly-by-night customer,” I told them. “I’ve been with you since 1985. I’ve always paid my bills on time. Look back over the history of this card, and all my credit cards with you. You’d be hard pressed to find a late payment.”

They agreed with me, but told me that the late payment triggered a reexamination of my credit history. Based on that review, my credit line was being cut in half, and that was that.

This made me realize a few things.

First, there are errors on my credit reports that I need to correct, a topic I’ll cover in an upcoming how-to column.

But second—and this is more depressing—the actual show of good faith I put in this company didn’t mean bupkis in the final analysis. To them, a credit score or some metric I couldn’t immediately fix meant more than the actual track record I’d amassed over years and years as a sterling customer.

Looking back, I see why I got angry: It hurt. It wasn’t fair. That’s also why I’ve declined to reveal who the creditor is in this piece; I could mount an all-out media assault and start dropping bombs via social media, Change.org and who knows where else. I’ve decided instead to let my wallet do the talking. I’m leaving this creditor as soon as I pay off my balance.

I haven’t put a single charge on the card since the incident, and while I keep getting form letters from this company saying “We Value Your Feedback!”, I know that it’s pure and utter bullshit. Feedback is only valued when it’s acted upon and changes are made. In this case, I’m not sure what else I can do to argue on my behalf—not when paying my bills in a timely manner for almost 30 years is meaningless.

You might wonder: ‘How does this apply to me?’

Credit has changed a lot since the 1980s—a time when, for example, you could deduct credit card interest on your taxes. (That consumer practice came to an end with the so-called Tax Reform Act of 1986.)

Like so many other things related to money, banking and credit has gotten much more impersonal, and a lot more corporate over the years. That might hardly qualify as news, but to the extent that creditors treat you more like a number, and less like a person, they’re also getting more brazen in terms of what they’ll do to you. And that is news, not that the credit card companies want you to know it.

In October, American Banker reported that consumer advocates asked the Consumer Financial Protection Bureau to take a harder line with credit card issuers. They cited many reasons for this, including issuers that push consumers into add-on products like identity theft protection; fees charged before an account is opened; 0 percent teaser rates; and faulty disclosures of online statements and grace periods.

If the CFPB takes action it will extend the protections consumers earned with the Credit Card Accountability Responsibility and Disclosure Act of 2009. Thanks to that legislation, you can look at your credit card bill and see how much of a monthly payment it will take to pay off your card balance in exactly three years.

Yet there is no legislation that can compel a credit card company to treat you with the respect, dignity and fairness you’ve earned.

As a balance sheet question, a $6,000 credit line cut makes zero impact on my bottom line, especially since my goal for 2014 is to pay off every last dime of my unsecured credit lines.

I’m leaving this card behind more on principle. If a dear friend makes a mistake—and an innocent one at that—I’m compelled by the laws of decency to look at their track record with me. If I can see they’ve spent years and years doing the right thing, the Golden Rule applies: I’ll treat them the way I’d expect to be treated, and give them a pass.

The facts here are simple. An on-time payment was a few dollars short. The same day I was notified of my mistake, I made amends and corrected it. For this good behavior, and for years of customer loyalty, my credit line was cut in half … with no recourse for appeal … no leniency whatsoever.

Hmmm. They repaid 29 years of unwavering loyalty by cutting my credit line in half. It’s time to cut that credit card in half.

About Lou Carlozo

Based in Chicago, Lou Carlozo is a personal finance contributor for Reuters Money, a columnist with DealNews.com, and a former managing editor at AOL's WalletPop.com. Contact him with story ideas for Money Under 30 at feedbacker@aol.com, or follow him via LinkedIn and Twitter (@LouCarlozo63).

Comments

  1. Unfortunately these types of major consumer banking decisions are make by computer algorithms instead of a human and many people wind up in much worse situations because of it, from checking account overdraft fees to home foreclosures. Banks have become very top-heavy and trying to find a human that makes enough money or speaks English well-enough to actually help you has become damn-near impossible.
    I do object to the myth that physically cutting up your credit cards actually does anything for you or to the bank. You didn’t say whether you actually canceled your card (which you still can do while carrying a balance), nor did you mention the major drawback of canceling a line of credit that is 30 years old, which is that it lowers you average age of credit history which can lower your overall credit score. Something to consider.

    • That credit card will still report on her credit report for ten years, so she won’t lose the age until ten years from now. However, you generally don’t want to close an unwanted card that has no annual fee. Just make a purchase every few months to keep the account active. It will cost the credit card company more money to service the account than they are making on swipe fees. In that scenario, it is costing the bank money to help your credit history :)

  2. That’s a double whammy when you think about it. You get the 6k reduction in the credit line because you have bad credit. Well the reduction can significantly increase your credit utilization if you don’t have many cards. This makes your credit number take another drop. I’d probably take the same approach as you and just cut up the card. With so many different providers out there, it’s not hard to find a new card provider. Plus you can take advantage of the introductory offers that so many cards are now providing.

  3. Sorry to hear that happened. Im sure it was some computer program that decided that and there was not much they can do. In any case, let’s return the favor by just treating them as a number and getting sign up bonuses and cancelling the card after.

  4. A credit card is not an obligation. They repulled credit and found you to be a risking bet. There is no relationship in credit cards. Its debt you owe them. If you become more risky, its done. You wouldn’t still be friends with someone after 10 years if you would out they were doing your wife would you?

    Stuff changes over time.

  5. Another Joe says:

    Personally, I say GOOD for you and good riddance to red eyed money hungry banks that show disloyalty like this one.

    A similar event happen to me with an American Express card, you know the one that blesses you with all of those skymiles. I was a real trooper for that card, swiping for everything from gummy bears to literally a car (paying the balance of course). During the economy downturn, they slashed my 40k limit to literally 1200 bucks, then closed it with no notice. I was so pissed, years of dedication for nothing. I declared them all the same and cut every credit card and started walking the cash/debit life and won’t look back. It’s an adjustment for sure, but I assure you there’s no better feeling that cutting the middle men.

  6. Technically, you weren’t a good customer since you responsibly tried to pay off your bills. How are they supposed to make money off of you? ;-)

  7. I had a similar issue with Bank of America. My payment was due on a holiday, which the bank was recognizing & closed. I was unable to make my payment on this due date because there was a problem with the bank’s online processing. I tried calling the bank, but remained on hold for over an hour & could not wait any longer. The very next day I called, made the appropriate payment, & apologized that I could not make my payment on the actual due date, & was also unable to reach a rep via phone. I apologized for this……when I did not need to do at all. Days later, I was charged a hefty late fee. I called the bank to discuss this because in my opinion the bank didn’t have any right to make my pmt due on a holiday when the bank is closed. They credited the late fee & dropped my $20000 credit line to $1000. I usually pay my balances in full and was able to close this acct.

  8. Martha Verdin says:

    I would not use it, even cut the card in half, but not cancel the account due to all the years of credit history related to it. But a good suggestion would be to set up autopay for the minimum of the account like 3 days before closing and make additional payments in other transactions. Is not a very good practice to wait until the last moment to make a payment.

  9. First, sorry this happened to you. It doesn’t seem fair and it’s hard to not take it personal. It’s a harsh reminder for everyone. The banks are focused on one thing: profit.

  10. Unbelievable! I had sensed that credit card companies were becoming less personal….but this is unreal! My in-laws had similar situation happen to them, however they chose not to part with the company. Not sure what I would do in this situation, but I believe that my question would be – How will this effect your credit rating, closing one of your older accounts?