I have now undertaken that I will boycott AMEX and it's services Forever!

Suppose that some Amex executive dealing with statistical analysis came to a VP and proposed what we now know that Amex is doing ie. tagging people negatively who shop at certain places. His proposal is bolstered by the assertion that, 'we stand to save a lot of revenue with this.' This guy says 'hey we can test it on 100,000 customers first. If it works, we can implement it on much broader scale.'

Ok so Amex has basically done this ...right? Well what if this isn't what they are really doing? I suggest that what they are doing is far more insidious. Consider for a moment the massive amount of data that they can review. Millions upon millions of transactions per day can be analyzed.

I suggest that they are not just looking at where you shop.
They are looking at when you shop. They are probably cross referencing what you bought at certain times compared to the same data from control groups. There is no telling how deep this rabbit hole goes.

I am willing to bet that any theory they can come up with can be tested so quickly and quietly that there is probably a large department dedicated completely to profiling their customers based on whatever they can come up with.
I feel like this is far more evil and intrusive than we can begin to imagine.

Teaches me to submit my post before proofreading.

To use your convertible car example, you buy a convertible. Based on what AMEX appears to be doing, you're not automatically part of the group that owns a convertible and are immediately a higher risk - regardless of your spotless and impeccable driving history.

That being said, AMEX is well within their right to cut the credit line for nearly any well-defined reason. It is, after all, their money you're getting access to. I don't agree with that decision based on the limited information we have, but I still respect their decision.

When I say "what's not to love?", I'm talking about my fee-free Blue Cash. I have other cards, and use them on the rare occasions I find myself shopping/eating/whatever-ing somewhere that doesn't take AmEx.

I have a kind of love-hate relationship with them, but I've done the math, and there is no other card out there that would earn me more cashback than my Blue Cash does. There's plenty not to love about American Express in general, but... I do love being paid to use their card and not shelling out a penny in interest.

For my cashback card I use Chase Freedom now (Citi Dividend goes in the shredder after they raised my interest rate sharply post-CitiBailout).

Good thing I wasn't traveling and depending on those bastards to buy my return ticket or whatever.

When in reality I snicker because I know half the time they pull that crap out of their wallet they get shot down, "Sorry, we only take Mastercard and Visa."

Oh, and also I get all the benefits of their card with my Visa and have no annual fee.

If any company did that to me i would cut the card up and complain/cancel immediately.

First off almost doubling my interest rate is an extrememly important change and if i wasnt notified even BEFORE this change occurred i would be quite angry.

Amex is Requesting tax returns, lowering credit limits for shopping at reputable retailers, and generally treating their customers like crap.

If you value your customers you keep them in the know about things like this, Credit limits are important, knowing your limit and not getting denied is the very point of HAVING AN AMEX.

i WOULD NEVER consider something a status symbol, nor a high class service that treated their customers in this way

then again having an amex with a 2000$ limit is kind of like having a BMW M6 Or Bugati Limited at 40mph....yeah its flashy... but theres really no point, and you would probobly be able to do better with other companies.

What's next? I'm going to be using my AmEx Delta SkyMiles card in the next few weeks to book some flights for a trip to Europe. I'm half expecting them to slash my credit lines because I fly Delta. Ho-hum.

@jacksbrokenego:

That'll be because Prime is decreasing, rather than because AmEx loves you. Not being snarky - I thought AmEx must be liking me when I noticed the same thing happening to my account a while back, then I thought "oops, my APR is linked to Prime, this is not favouritism on American Express's part!"

Oh well.

@johnva:

Good catch, johnva - I know that, but I guess plenty don't (ie those that use cards to the max, pay them in full by the due date, and thus have the kind of icky-looking reported utilization that makes them appear to be in dire financial straits) - so yep, even if you're not carrying balances at all, but paying upon receipt of your monthly statement (an eminently reasonable thing to do if you don't know/care that this may play havoc with your FICO scores!), an ill-timed credit line decrease to just above the balance would certainly have unpleasant effects. I know I lost 36 EQ FICO points when I made the unhappy discovery that my US Bank Visa didn't report the statement balance to the CRAs, it reported the balance as of the first working day of the month. My statement closes right around the 28th-30th, so you can see why I'd assume they report like most other issuers. Then I made a big (77% of credit line, I think) purchase the day after the statement cut, and... immediate ouch.

@Sam Wille: While I tend to agree with you that hating on Walmart is a hobby generally enjoyed by those fortunate enough to live in areas with a variety of stores for every kind of commodity and/or means to spend a little more for quality/principles, I have to disagree with this:

It isn't Wal-Mart's fault that a product is substandard.

Yes it is. Walmart has an extremely strict standards team for every type of product they work for. Their buyers can demand anything they want from a manufacturer, and most will comply. Priority is usually to cost, but I've also seen them demand reams of data proving that products will adequately clean floors, keep fleas off pets, suppress coughs, etc. This is especially true when they're dealing with small companies and not P&G, Colgate-Palmolive, etc.

Most of the time, they're just rubber-stamping tests that come in (maybe as part of a CYA/due dilligence) but if they wanted to get serious about less toxic product composition, valid product claims, and durable electronics, they could. They choose to prioritize low prices, which is currently is a valid business model - but one I don't like. When they start using their power for good, I'll probably reconsider.

Also, your point about the non-working spouse not qualifying for income on his/her own isn't actually true for most credit cards (or at least, wasn't before this credit crisis began - I haven't tried applying for one since then). 99% of the applications say "household income", not "individual income". You can legally include your spouses' income in that income line on the application even if you are applying for a card in your name only. So you don't need your own income to get a credit card in your name that isn't joint.

Just because things are one way in your neck of the woods doesn't make it so across the board.

Plus, Wal-Mart doesn't always have the lowest prices. I get my groceries far cheaper at my local Kroger, for example. Many times when I comparison-price items, Wal-Mart actually does NOT come out the cheapest.

Only thing we don't like is the cap on cash back rewards. But since we pay our bill off each money, it's a fine deal for us anyway.

Ron

Depends on your lifestyle, spending patterns, etc. The $450 annual fee AmEx Platinum is apparently more than worth the fee to some people - whereas to me it would be much like flushing a fistful of fifty dollar bills down the toilet.

Only AmEx charge cards (their traditional product line-up, the Green, Gold, Platinum, etc) officially require payment in full each month, although there's a lot of pretty strong evidence that even if you carry one of their credit cards, they might say you can carry a balance from month to month, but they'd really rather you didn't.

But the advantages of using AmEx? Aside from things like extended warranties on purchases made with your card, perks like roadside assistance with some cards, etc etc etc... the reward points/airline miles/cashback can be pretty impressive. I'm yet to find a card that can even come close my AmEx Blue Cash in terms of $$$-earning potential, let alone beat it. All with no annual fee, too.

I think he means the rate itself fluctuates in line with the prime rate. I spent a while thinking AmEx loved me when the APR on my old Blue kept dropping month after month. Then I figured out that it was a variable rate, adjusting itself in line with Prime. I guess I should have known that about my credit card's T&Cs, but as I never carried a balance on it, it was of little interest to me to keep note of such things.

Glad I figured it out, though - saved me taking offence when the rate went up a bit the month after I realized my APR was linked to Prime.

If your card is a Blue, Deadspork's guess is most likely spot on.

Yup. "No limit" charge cards suddenly developing credit limits, for example. Without any kind of late payment or delinquency to precipitate such action. I'd guess that, in general, charge card customers are a bit less prone to adverse action as a result of panic on AmEx's behalf.

Yes. They can eff up your FICO scores and then turn around and point at your newly-effed-up FICO scores and say "look, you have bad FICOs, see!"

Yet another good reason to never, ever carry balances of more than a few dollars at a time if you can possibly help it (0% intro rates and balance transfer offers be damned) - if you don't have any utilization for a reduced credit line to fuck up, your FICOs will be impervious to credit line decreases.

And as of a couple of months ago, they've put a stop to the "reallocate your credit lines" option that they used to have. Bah. I used to like keeping most of my available credit lines on the Blue Cash (as I use it all the time, for everything) until such time as I wanted to book myself a flight (with Delta), at which point it became necessary to raise the limit on the rarely-used Delta SkyMiles card up from the bare minimum. Oh well. If they hadn't have decided that that limit-reallocation thing was somehow a bad thing, you'd have been able to fix things to make them at least a bit more to your liking. :(

American Express has this special bipolar thing going on where they offer credit cards but hate for you to actually carry a balance. Too entrenched in the mindset of pay-in-full-every-month charge cards, I guess - if you read the blurb about any of the revolving credit cards that they offer, it always talks about having "the option" to pay a balance "over time" ("over time" possibly meaning, oooh, three months if you're lucky before they start to take a dim view of it) - it seems pretty clear from what I've read/heard about them that they'd really, really rather you didn't carry a balance. It makes them all twitchy, 'cos they clearly think if you're carrying a balance, it's because you can't afford to pay it back.

Not saying this happens every time, to everyone who ever carries a balance with them - I was carrying a reasonably hefty balance on one of my AmExes for a few months before I got around to paying it down to zero, and they didn't seem to freak out. But having the temerity to actually use the credit they've extended seems to rank up there with the reasons people are given for having their credit lines decreased (that and having a mortgage serviced by Countrywide, or shopping at apparently undesirable establishments, etc etc etc). AmEx giveth, and AmEx taketh away, with much enthusiasm and increasing frequency.

(Knock on wood, my AmEx credit lines are intact as of an hour or so ago, and I hope they stay that way, because they really are my favorite cards - what's NOT to love about all that cashback??)

@Pylon83:

I read alot of stuff on here that I just don't get. I guess I am lucky. I have never had a problem with Best Buy, Bank of America, Amex, or the host of other businesses that get blasted on here. It makes me wonder sometime how much of what is posted on this site is real and how much is just bullshit and spin.

This "information asymmetry" (love that term), can be overwhelming on top of the already arbitrary nature of credit scoring companies, which seem to be a collective omnipotent entity beyond the reach of any institution. Personally, I've decided to opt out; I'll survive with a mediocre score by using my card judiciously and paying on time.

At this point they are beating you down, and you thank them when they offer you crutches.

I get the impression that those who are still struggling to play by the constantly changing rules of the credit game have been instructed to spread the blood of a sacrificed lamb on their doors. The rest of us can say goodbye to our first born!

@johnva: You're absolutely right. We actually agree, you're just more articulate about it.

Dropped Amex like a used condom after refusing to pay another 150.00 annual fee for the so-called Membership 'Rewards' Program green card. You'd think being a member for 17 years would count for something. Went with a Visa since more businesses take it anyway. Plus, they nearly f'd up our vacation because we didn't tell them we were going out of state.

@ohiomensch: It seems to much a legitimate rationale for it to be funny. She just bought the house last year and thankfully with a fixed rate mortgage. The house inspector said the wood under the shingles was new but we discovered that apparently the shingles weren't, wtf? The previous owner was a weirdo. For instance, our neighbor said he caught him out side sealing the driveway at midnight wearing a miner's helmet. Perhaps he reshingled the roof with old shingles but whatever, I get your point and as someone else commented, it's probably an algorithm making the decisions for the CC companies.

Then it occurred to me that they probable deliberately accept merchants like that so they CAN filter out potentially questionable card users.

However, in these times you'd have to ask what's causing people to shop at these places -- is it that they are potential credit risks, or that they just want to save money?

@LankanDude: But that actually can have an impact on your credit score, depending on what type of AmEx card you have. One of the measures on credit reports is available credit v. used credit. They just tightened the available credit so it looks like you're getting closer to your limit (although in your example, not by much). So there are real consequences to this action.

You'll be happy with Discover till they jack your rate up to 29.99% for no reason. I've had it happen 3x over last 10 years with them, no late, no over, no balance. You think AMEX is bad, try working with Discover's credit department.

I buy the name brand goods just as much as I buy the generic; there is virtually no difference, if any. Why pay full price for a bag of Frito's if the 'Great Value' brand tastes just as good and is a little cheaper? I don't run out and buy up all the 'Great Value' products because not all of it is great. I would say for every one or two generic brands I buy, there are five or six name brand that I buy in addition to it. Some things in my opinion just aren't right unless they are "x" brand.

I get this sense that people think only uneducated consumers shop at Wal-Mart; I believe that at the end of the day I'm getting a great deal on the products I purchase. So far, no compelling evidence has been brought to my attention to lead me to believe otherwise. I walk - rather, my wife walks out of Wal-Mart having spent $120 a week on groceries for a family of four. No fancy trickery and we get healthy meals at home. My daughter, my wife and myself all brown bag it to school and work. Our son is in private care and his meals are provided five days a week. Just the other day (Saturday) my wife got shoes to go with our kids' Christmas outfits and spent about $17, which was $10 cheaper than the BOGO offer at Payless. And you know what, shoes we've bought at Wal-Mart last just as long (if not longer) than the footwear we buy at other retailers such as Target.

I guess the safest comment one could make about Wal-Mart (or any retailer) is that in the end "Your Mileage May Vary"?

Can we say "Civil Rights Lawsuit" come Jan. 20? I knew you could.

Prime going down shouldn't raise rates. The fact that the banks are reeling is why I think they're raising rates. They want to extract more money from anyone carrying a balance.
Funny thing about credit. The people who can't afford to pay their bills end up owing even more money than those who can and do pay their bills.

@captainpicard:

My thoughts exactly. There is always the risk that someone isn't going to pay their bills. Even people with perfect credit can have missed payments. In this economy where all credit card companies are reporting record write offs, it makes sense to tighten up where you can to curb the risk. If you knew that when you got ripped off by someone that they all had one or two things in common, wouldn't you start to screen for that before you put yourself at risk? Insurance does that all the time. Just because I wreck every convertible I drive shouldn't mean that they charge me higher insurance on one, should it? What they are doing might suck for consumers, and I'm one of them, but they are still a business that is trying to make as much money as possible while losing as little money as possible. You can't hold it against them that they have access to data that indicates certain trends result in bad accounts.

I look forward to the day when someone is able to get their hands on the list of retailers that impact this decision so that we can all avoid them. Of course, then that would mean all the bad credit people out there would just start shopping at other places and ruin it for everybody there too... However, the thing to keep in mind is that it is never just ne thing that causes a decision like this. There are always other factors that go into it. Maybe you shop somewhere that a bunch of people with 530 FICOs shop, but in addition to that you may have a high debt to credit ratio and have suddenly started carrying more of a balance on you cards. There is more to your credit score than just never missing a payment.

It's just market segmentation. You don't go to Wal-Mart if you want high quality. You go there if you don't mind sacrificing a bit of quality in order to get a cheaper price. And obviously this varies a lot depending on what the specific item is. Some things, like name-brand toothpaste, there's probably not much difference, if any, since it's such a generic product. But I wouldn't buy say, electronics or appliances at Wal-Mart. For those, I prefer to buy better ones and keep them a long time.

People may say my perspective is the exception but not the norm, but to that I call shenanigans.

But to say that everything about Wal-Mart is great because of low prices is simply not true. There are a lot of good, objective reasons why people don't like Wal-Mart that don't have anything to do with class snobbery. A huge one is the the "race to the bottom". Wal-Mart's low prices are not really the result of increased industrial efficiency. They are a result of the fact that Wal-Mart is willing to go to overseas suppliers that don't have high quality control and environmental standards or labor costs. Yeah, it's "cheap", but at what cost to our nation and our world? We're just outsourcing our environmental and human rights abuses and getting crap products and a crap economy in return.

Can someone smarter then me explain the advantages of using AMEX at all? The only thing that I can think of is that you need to pay the bill off monthly and that kind of forces you out of the more risky behavior of letting your balances roll to the next month. The annual fee alone has always been enough for me to say "no thanks" to them

@HubertPhoenix: Probably only changed because Prime went down, sorry to say :D

Does anyone remember in the 90s when AMEX would call you if your charges got too high that month (before the payment due date)? This was when their only card (to my knowledge) was due in full each month (minus a few exceptions).

I bought concert tickets for 8 people plus other normal charges for that month - but it was high for me. I got the call questioning it. Ive stayed away from AMEX since then for that reason.

Walmart bashing is for people who don't live in small towns and who see the world in black and white. And for people who have the luxury of being able to pay more for the same stuff.

A lot of companies right now are lowering credit limits on accounts if you're not using it. If you have $10k credit but you generally only use about $2k, you may see your credit limit reduced.

This is across-the-board in many cases, and to reduce risk.

If you're not using the credit limit, you don't really need it, but a lot of people take it personally.

Racial profiling=bad... class profiling=good.

@jpdanzig: If AMEX does this to you, then that is exactly what they want you to do.

CC companies do this crap to people they actively want to lose. So, if you get this letter, sorry, they literally do not value your business.

Whether people like this or not, you have no right when it comes to your credit limit.

If you read the fine print, it says that the credit company can do whatever they want to your account at any time, because it is their account.
you don't like it? Tough.

Only thing to do is boycott Amex. Bringing it up with them will do nothing.

Um, and what if you use your Amex at really high-brow places and you only make $20k/year?

@Persistence: They probably think you are homeowner fixing your house because you are on the verge of selling to circumvent a forclosure.

That's supposed to be a joke, but I wonder.

@Landru: Thats why they got themselves declared a "bank" about a month ago. Just so they could jump on the bailout train.

Lots of our comfortable middle class types would rather spend more somewhere else for the same cheap Chinese crap than be caught dead shopping with the "riffraff" in a store that "caters" to "riffraff". It's almost a fetish to be able to actually say, "I wouldn't be caught dead in a Walmart!".

I shop at WalMart now that I'm retired and alone on a fixed income and I shopped at Walmart 20 years ago when I was a middle class fire chief making 70k and my late wife was making the same(which was OK money back then).

Snobs is snobs and by damn, if they're willing to pay extra for the privilege of being snobs, let 'em.

I know fraud happens everywhere, but since when is Amazon (?!) the biggest red flag out there? What about customers who, I don't know, make large electronic purchases and ship them to Nigeria instead of the credit card billing address? There's no way to flag those people instead?

I'm not sure what you mean by a "scientific model of justice", though. I'm a huge believer in science, but I also think that the limits of scientific understanding need to be recognized, especially when you're working from incomplete data (as Amex is in this case). It's hard to make good scientific theories and predictive models even for physical processes, much less models that predict something as complex as human behavior. I feel like the application of these techniques has gotten ahead of the understanding by a bit. "Justice", to me, is inherently based on non-empirical ideas like philosophies, beliefs, and ideals. Would you care to clarify what you mean by that phrase?

Go to the stores that AmEx says have a high chance of repayment, charge a bunch of stuff, and default.

[www.walmartmovie.com]
[www.pbs.org]

@johnva:

I think we can agree to disagree respectfully.

In large part, I think "equality and justice" are best defined by skillfully-used statistical methods, not arbitrary idealism. I believe in a scientific model of justice - your mileage may vary.

@tinmanx: That is bull. I've worked at a cc company, and we've had people call in to lower their limits all the time. If you ask for it, it can be done.

There is a very good chance that location may have played a part in it. My parents once had a credit card stolen out of the mail, apparently, and the transaction that tripped the fraud alert at the credit card company was that someone had used my parents' (who live in the upper-middle class suburbs) card to buy groceries from a supermarket in the town in our state with the highest violent crime rate (aka, the ghetto).

Most of that "made in China crap" is the same "made in China crap" you find everywhere else, but for cheaper. So why not buy it there?

And I think we just disagree on the "broader social implications". I'm not comfortable with charging black people higher insurance rates because black people as a group have more heart disease or whatever. As I said, I'm more comfortable with that if they instead intelligently figure out what the actual underlying causal factor is (such as obesity rates) and charge higher rates based on that. Bringing us back to Amex, the stores you shop at do not cause you to default on your credit cards. It's just a factor that they can observe that is correlated to the real cause of higher defaults. So they are trying to use statistics on a very incomplete view of the data that actually causes what they are trying to study. That is why they are often making bad, nonsensical, and unjust solutions. There may not be a better solution, like I said, under their current business model. But that's their problem. We need to limit certain practices as a society for reasons of equality and justice.

As for "mass credit contraction" as a consequence of what I'm saying, yes, that might happen in the short-term. Of course, that seems to be happening anyway. I think you need to think about this more long-term and not just based on the immediate results. It was a societal choice to run our country on consumer credit to such a degree, and it's one we can revisit.

@johnva: How about a husband who is a "spend at all costs" kinda guy and a frugal wife? Or it's your kid's card and he's got problems keeping to limits?

However even those people with the charge cards could be in danger of lowered credit limits.

Personally I think of this similar to the housing bubble. Credit limits were excessive for most people and now are being shifted downwards to a more reasonable and sustainable level for both consumers and the credit card companies. Those worried about their FICO scores, if you think about it as more and more people are given less credit, then the range of 'good' ratios and credit amount will change such that it will include much more people.

@MrsLopsided:

If you graphed the profitabilty of an investment bank by division, you'd see several green bars pointing upward. Then you'd see one bar, labeled proprietary assets, like a big red anchor. It would look exactly like a plot of the sea level of every major US city and the Marianas Trench.

Meanwhile, if you do the same thing with auto companies, you'd see nothing but a sea of red. And worse, you could do that for the last 14 years without change.

My thought is that the government is doing an effective job allocating TARP, if getting that money back is ostensibly the point.

@johnva:

You make a popular point, but I disagree. To address some of your statements, though, I would argue that algorithmic, statistical methods were not flawed so much as the flawed inputs. Blaming the current crisis on mathematical risk modeling is like blaming the calculator for your fat fingering. There is nothing wrong with the math - everything was wrong with the business processes surrounding and underlying that math. The jig was up when the toxic securities were rated so highly, a flamingly flawed datapoint dutifully dumped into a risk analytics tool that came up peachy-keen.

From my perspective, I don't mind the broader social implications of statistical analysis. In your racially-charged example, I'm comfortable with charging higher rates.

And of course, I would mockingly state that one guy losing his limit to Wal*mart is far smaller injury than the mass credit contraction consequent to the business model you propose.

My gf has always been faithful with cc payments and recently had both her AMEX and Mastercard capped where they were. What scares me is that she went from having a card with a 20k limit to 8k on that same card while never missing a payment. Most recently her Mastercard was capped after she puchased shingles to fix our roof with no notice or anything. She was pissed.

If some can defend statistical techniques as a way for CC companies to "practicing conservative risk management," then it works the other way too. "Well, one of your businesses is ruining my credit with AMEX, so none of you will receive my business." Let the retail chains battle AMEX themselves.

Does anyone other than me have issues with the fact that AMEX is manipulating credit scores by these practices? They lower credit limits, make FICO drop, raise rates based on lower FICO scores.

And what you're saying is that Amex can't investigate people's credit more individually because it would be too costly and time-consuming to actually look beyond statistics, basically. I disagree with that...they could, if they wanted, do something more like a manual mortgage underwriting whenever they issue a card (and then plan on keeping that person as a customer for many years). One of my points is that this mentality of using algorithms and statistics for decision-making is part of what got us into this financial mess in the first place. A major reason things got screwed up is that people were no longer individually evaluating the investments they were making. It might be too expensive to do that under the credit card company's current business model, but they can change their business model.

Like I said, I totally understand what you're saying. I'm just saying that I think that overuse of statistics is a serious problem today for reasons much more complex than whether it "works" in the short term for an individual corporation that is doing it.

@Ajh:

I'm not saying that you will default on your card. That's not what AMEX is saying, either.

They're saying that your patronage of that store correlates you to a consumer behavior that indicates a materially higher credit risk. The decision to reduce your credit line would be made in context with market conditions, other aspects of your credit history and habits, etc.

Are you saying because we all shop at the same walmart and they default on their cards, that I will?

@johnva:

Statistics aren't automated decision makers, and that whole "human beings" thing is rubbish. Credit card companies are not altruists, and they do not have infinite capital. Statistical techniques are the most compelling tool available that financials and insurance industries have to manage risk and exposure. There is a dispute resolution procedure intended to catch some of the more egregious failures - I'm not sure if this qualifies given the limited info in the OP. Has this guy also been running up his balance?

American Express cannot exactly send an agent to your home to look you in the eye and "judge you." Chances are that you have no power to determine many of the factors that may prompt a writeoff for AMEX, such as unexpected job loss.

My take on this is that Amex et al expect the economy to get a whole lot worse in 2009 and are taking steps to protect themselves before you go under.

Personally, I think secured lines of credit are better for long-term debt repayment, but what do I know? Credit cards, ideally, should fill the gap between emergencies and bonus paycheques; with all amounts paid off in a year at most.

The list is too long to start getting into with what is wrong with wal mart. Let's just suffice to say that there's plenty.

Yes, cheapo made in China crap full of lead and poison is just what I want my family using and playing with and eating off of. And never mind the horrid, horrid quality of their electronics. Stuff should not die within 3 months of using it, every time you buy it.

And if you can buy clothes from there that last more than 2 weeks before falling completely apart with normal use, you are so the exception and not the norm. Now the lowest place I buy clothes from is Target, though I prefer used hand-me-downs any day.

All I buy there now is certain food stuffs and the occasional odds and end I can't find elsewhere because they've forced everyone else out of business. I would much rather spend a little more in gas to go to 4 different stores to get more expensive, quality items than buy it from wal hell. And I make freaking minimum wage and i'll still do it. People these days have no standards.

Oh yes, and don't buy their meat in their supermarkets- you wouldn't believe how much bad meat I have seen gone through the registers. Are people just that stupid now that you can't tell when meat is spoiled?

It's called 'the high cost of low prices' for a reason, sadly.

@johnva:

What you call "overfitting data" I call "practicing conservative risk management." In this environment and given recent events, I would rather take the risk that I'm potentially overshooting on these credit line reductions than assume financial exposure. Given the tenuous capital situation out there, financial exposure is not something a bank wants to take in most cases, and AMEX uniquely acts as a lender.

I'm aware that correlation is not cause, and not a conclusive judgement. It does, however, imply a premium in costs or prompt a limitation of exposure. Statistical analyses are imperfect by nature. As for your second graf, I think we may have different understandings of "fairness."

Oh no, everyone beware, you're going to catch default-itis or something.

Time to take my business elsewhere.

Nevertheless, yes, American Express being honest and forthright would not piss off as many customers.

When Walmart moved into your town or suburban area, the local record store suddenly couldn't compete, and closed its doors. So did a few of the shoe stores, bookstores, smaller boutique clothing stores, smaller groceries, electronics stores, small-town 'real' pharmacy, etc.

The people running and working for these businesses were then faced with the need to take a (most likely) lower paying job.

The more commerce consolidates, the more the lower classes grow in population.

If they really believe that certain places make you a bad credit risk, of course they aren't going to tell you which places trigger it so you can avoid it - or people who are likely to default would avoid those places and then default.

"Actuarial math" can be used to show all kinds of things, but that doesn't mean it should always be used. For example, certain diseases are correlated statistically to being black. So "actuarial math" might validly show that black people should pay more for health or life insurance. But we don't allow that because it's not fair to use statistics in that way. The real cause of a lot of those diseases, like heart disease, is often poor diet or obesity, which is correlated to poverty, which is correlated to being black. So just looking at statistics without a smart and critical eye can lead you to a misleading conclusion that causes you to treat a large group of people unfairly.

(Can you tell I'm not a huge fan of the insurance industry?)

@White Speed Receiver:

For the same reason that living in Detroit, despite your massive bank account or well-paying job, affects your ability to avoid foreclosure. In credit, insurance, and lending you are always guilty by correlation. This is why the young are more expensive to insure and why Wal*Mart shoppers are considered to have materially higher default risk.

I'm sure AMEX's risk models could substantiate the decision with reams of data. It's not a particularly comfortable conclusion, but it's a valid risk management technique.

@ADismalScience: Apples and Oranges, I believe. If I, a boring and cheap accountant, shop at the same Target/Wal-Mart/Pamida as the homeless guy down who "lives" near the store, how does that affect my ability to bills?

That's all fine except they will be earning 3-4% from every purchase that you make on the card from merchant processing fees. They really don't care if you pay if off on time. They still get paid.

I support this practice. Default rates correlate to a variety of factors other than FICO score for good reason. Actuarial math can justify this decision fairly easily.

Or should flood insurance cost the same in New Orleans that it does in Nevada?

If I was at a store and was declined I would canx. the card. You are the customer they make money off of you the customer. There are lots of companies that would love your business. I was on vac once and a cashier swiped my card 2x by mistake and they shutdown my card as a pos. fraud loss I called the bank and they told me they could not even turn the card back on as they used a 3rd party security co and they were off till monday. I never used that card again and my wife even worked for that bank.If that would have been my only card I would have been even more pissed. The same thing happened to a local judge when he and his wife went to cancun the airline lost his luggage and they locked their cards out because it was a non usa purchase he spent the weekend with little cash and their only card locked till monday.Man were they pissed when they got home.

I'm starting to think that we'll be seeing another round of merchants drop their AmEx acceptance. I don't think any merchants want to potentially carry the label that only deadbeats shop there.

This is another result of access to too much credit by the wrong people. If they screened applicants properly (instead of mailing thousands of cards to any name they can find), this would be much less of an issue.

Though as the economy continues downward, the credit worthy may not be so for long.

I still have shirts that I wear that I bought from Wal-Mart years ago that have held up better than pricer clothes bought 8 months ago. Your mileage may vary, but if you eliminate Wal-Mart what other low-cost option is going to step in its place? I'm personally not willing to spend too much more than I do now to keep our monthly expenses low. Unless you plan on getting me the same deal I get on diapers at Sam's somewhere else, I'm happy to shop at Wal-Mart / Sam's and enjoy their "crap".

@Nazism as well as other White Supremacist groups bascially are against anyone who is not white and is not a protestant Christian. I know the KKK in the past has campaigned against Catholics and Jews alike.

I don't have problems with groups of people, just some individuals from those groups.

I don't think that this kind of "redlining" is illegal necessarily--no more so than stores in "bad" neighborhoods demanding you check your bag, when their counterparts on "nice" neighborhoods have no such policy--but if I were a retailer in this economy, I would be furious at anyone putting up barriers to people shopping at any of my stores. Money talks, baby.

With the falling real estate prices and if you're financially solvent, you could start a local hometown business and cater to those who have gotten their credit slashed for shopping at Wal-Mart.

Seems much more the case than what they're doing, and if they were honest, they wouldn't bruise their customers' credit rating.

I never get why in the world anyone would want to cut their own credit limit. If you don't think you can spen responsibly, pull the card out of your wallet.

A higher limit tends to increase your overall FICO score, so it's always a bonus to have a greater limit.

@Michael Bauser: Redlining was my first thought, as well. There's something called the "means test," where even if you don't redline according to geography, anything else that has the same effect can be construed as illegal against a specific race/religion/etc.

It occurs to me: We might be misleading ourselves by focusing on the names of the stores Kevin shopped at. What if the location of the stores is the issue?

That is, instead of penalizing all Wal-Mart (or whatever) shoppers, AMEX is penalizing people who shop at specific Wal-Marts that have a lot of deadbeat customers. In AMEX's opinion, Kevin might be shopping in a deadbeat neighborhood.

If geography (and not just brand) it the factor, we should all be doubly annoyed, because that's coming close to redlining credit card customers. If it does turn out that AMEX's policies are unfairly affecting predominantly-minority neighborhoods, they could get their asses sued big time.

I mean, it's not like they're going to actually tell you 'based on the fact that you gave a donation to the First African Methodist Church, we've decided you live in the 'hood and you're a bad credit risk'.

@YoFonzie: First they came for the jews...

Thank Allah I'm Catholic. They'll leave me alone, right? I'll just let them take the Jews, and the Cigarette smokers, and the people who don't deserve credit, and the people who do deserve credit, and let them ignore me.

Maybe I should start shopping at walmart, but then I don't have an AmEx.

Rock on, dude.

The letter I received said that the decision would not be reversed, and I didn't think my powers of persuasion were such that it would be, but the whole thing made me feel a little ranty, so I figured it was worth letting someone at AmEx know that it pissed me off and convinced me to no longer use my card, even if it WAS just a lowly CSR. Since they had called to find out why I wasn't using my card and all.

Not only do you have no privacy from the government but commercial, unregulated data warehouses which own data about every bit of your life. For now they're just showing their disapproval by reducing credit limits for shopping at a merchant they don't approve of...wait till they, like another poster mentioned, prevent you from eating unhealthy food since that may cause an early death and failure to pay your debts.

Wait till you can't get a job because your prospective employer pulled a ChoicePoint report on you that indicated you've had 2 heart attackes...and putting you on their group medical plan will increase premiums for their entire employee base.

Or, what if that report showed you've paid for a porno PPV movie with your credit card...and the employer doesn't want to hire any smut fiends.

First they came for the jews...

On a different note, I can't help thinking this sounds a lot like redlining.

It seems like these days if someone is using your card at all you would reward them, not punish.

But I don't have the business acumen required to bankrupt a large multi-national company so what do I know?

I assume I got the letter because contacting customer service somehow threw up the flag to review my account.

That reminds me, I need to go to the pawn shop with my amex.

I'm going to go out on a limb and assume that AMEX doesn't discriminate on race or gender, so after ruling out race as a contributing factor to his shopping habits and new credit limit, what was the reason for pointing out that he's black?

@TheFuzz53:

Why, the risk is all AMEX not the merchants.

Maybe it was Ruby Tuesday. They figured the sodium and fat might cause him to die, forcing AMEX to wipe his debts clean.

Well, naturally, I freaked out and thought that maybe I had an error on one of my credit reports (since I don't have any delinquent accounts), pulled them all, and no errors or problems to speak of. In fact, my credit score was higher than I expected. My repayment history with AmEx was perfect, never a day late in my 3 years with them, and they even had lowered my interest rate at one point for being a good customer. I do carry a balance on the card (just graduated college and I'm now interning, so it's unavoidable at the moment), but always make more-than-minimum payments.

I live in a college town with a lot of sketchy poor people of many varieties, so it's completely possible that I shop at the same places that deadbeats shop. But is that any reason to assume that I'm just like them, in the face of 3 years of evidence to the contrary?

I cut up the card and haven't spent a dollar on it since then, except my gym membership, which is automatically charged to it every month. They called me a few months ago and asked me if I had lost or damaged my card and if I needed a new one, and I gave them an earful about lowering my limit for no appreciable reason.

Actually, this totally may explain why I had my AmEx limit cut in half. My business card had been used for high in tech purchases earlier in the year (Sun, Dell servers). Once I paid that off, I started using the card for smaller purchases (e.g. a bunch of business dinners at chains, office supplies,). Shortly after I did that my limit was cut in two.

See it as an opportunity to stop buying their crap and support the local hometown businesses.

If Amex pulls this crap on me, I'm going to cut up their card, close my account, and save $75 a year membership fee for the privilege of being insulted and mistreated in this way...

Guess they'll have to drop pretty much everyone's credit card limits.