credit card limit story

[scaredyclassic]

I have this credit card I used a lot. I like it. It’s from barnes and noble. I get gift cards based on spending. I use it all the time. the limit was 4,000 which was enough for my monthly needs. I always pay the full balance off monthly. They just knocked my limit down to $500 because i have “too much outstanding credit card debt”. I don’t. I have $50k at 0% on a card, sitting in a bank earning 2.5%. What’s funny is how unrealistic, even idiotic the credit card company is. I would almost certainly never default on this credit card. I have a stable job and have never even been late on it. I have plenty of money in the bank. I mean, if they actually analyzed my ability to repay, the card limit would be a lot more than 4k. Somehow, this seems like a microcosmic example of the inability of banks to truly determine credit risk. They factor they looked at (50k outstanding on one credit card) was such a small piece of the picture. I don’t really care, screw em. there’s other cards. it’s just funny that their decision is so utterly irrational in terms of risk management. Maybe as dumb as the loans they made on housing, ina way. Based on no real information on ability to repay.

[meadandale]

You have a balance of $50k on one of your credit cards and you think they don’t know how to price risk?

I think that they are very smart to yank your limit.

[meadandale]

You have a balance of $50k on one of your credit cards and you think they don’t know how to price risk?

I think that they are very smart to yank your limit.

[meadandale]

You have a balance of $50k on one of your credit cards and you think they don’t know how to price risk?

I think that they are very smart to yank your limit.

[meadandale]

You have a balance of $50k on one of your credit cards and you think they don’t know how to price risk?

I think that they are very smart to yank your limit.

[meadandale]

You have a balance of $50k on one of your credit cards and you think they don’t know how to price risk?

I think that they are very smart to yank your limit.

[TheBreeze]

[quote=meadandale]You have a balance of $50k on one of your credit cards and you think they don’t know how to price risk?

I think that they are very smart to yank your limit. [/quote]

Yeah, the credit card company doesn’t know that you put that $50K in the bank. For all they know that money’s long gone and you may lose your job in this economy. I understand why you would be upset, but I can’t blame the B&N credit card company for their actions.

[TheBreeze]

[quote=meadandale]You have a balance of $50k on one of your credit cards and you think they don’t know how to price risk?

I think that they are very smart to yank your limit. [/quote]

Yeah, the credit card company doesn’t know that you put that $50K in the bank. For all they know that money’s long gone and you may lose your job in this economy. I understand why you would be upset, but I can’t blame the B&N credit card company for their actions.

[TheBreeze]

[quote=meadandale]You have a balance of $50k on one of your credit cards and you think they don’t know how to price risk?

I think that they are very smart to yank your limit. [/quote]

Yeah, the credit card company doesn’t know that you put that $50K in the bank. For all they know that money’s long gone and you may lose your job in this economy. I understand why you would be upset, but I can’t blame the B&N credit card company for their actions.

[TheBreeze]

[quote=meadandale]You have a balance of $50k on one of your credit cards and you think they don’t know how to price risk?

I think that they are very smart to yank your limit. [/quote]

Yeah, the credit card company doesn’t know that you put that $50K in the bank. For all they know that money’s long gone and you may lose your job in this economy. I understand why you would be upset, but I can’t blame the B&N credit card company for their actions.

[TheBreeze]

[quote=meadandale]You have a balance of $50k on one of your credit cards and you think they don’t know how to price risk?

I think that they are very smart to yank your limit. [/quote]

Yeah, the credit card company doesn’t know that you put that $50K in the bank. For all they know that money’s long gone and you may lose your job in this economy. I understand why you would be upset, but I can’t blame the B&N credit card company for their actions.

[davelj]

[quote=scaredycat]it’s just funny that their decision is so utterly irrational in terms of risk management. [/quote]

Actually, this is one of the MORE rational decisions I’ve seen by a financial institution in the recent insanity. Pay off the $50K and I bet you’ll see your credit limit on the Barnes & Noble card increase. This is the price you pay for financial gamesmanship. 2.5% on $50K is $1,250 pre-tax. After tax, probably $900 or so. And you’re having to pay down the balance with a minimum payment, so you’re not getting the full $900 in the first place. And we’re assuming you didn’t have to pay a 3% transaction fee to get the $50K, which is highly unusual. All in all seems like waste of time given the hassle involved and the pittance of a return. I mean, why bother? I don’t get it.

[davelj]

[quote=scaredycat]it’s just funny that their decision is so utterly irrational in terms of risk management. [/quote]

Actually, this is one of the MORE rational decisions I’ve seen by a financial institution in the recent insanity. Pay off the $50K and I bet you’ll see your credit limit on the Barnes & Noble card increase. This is the price you pay for financial gamesmanship. 2.5% on $50K is $1,250 pre-tax. After tax, probably $900 or so. And you’re having to pay down the balance with a minimum payment, so you’re not getting the full $900 in the first place. And we’re assuming you didn’t have to pay a 3% transaction fee to get the $50K, which is highly unusual. All in all seems like waste of time given the hassle involved and the pittance of a return. I mean, why bother? I don’t get it.

[davelj]

[quote=scaredycat]it’s just funny that their decision is so utterly irrational in terms of risk management. [/quote]

Actually, this is one of the MORE rational decisions I’ve seen by a financial institution in the recent insanity. Pay off the $50K and I bet you’ll see your credit limit on the Barnes & Noble card increase. This is the price you pay for financial gamesmanship. 2.5% on $50K is $1,250 pre-tax. After tax, probably $900 or so. And you’re having to pay down the balance with a minimum payment, so you’re not getting the full $900 in the first place. And we’re assuming you didn’t have to pay a 3% transaction fee to get the $50K, which is highly unusual. All in all seems like waste of time given the hassle involved and the pittance of a return. I mean, why bother? I don’t get it.

[davelj]

[quote=scaredycat]it’s just funny that their decision is so utterly irrational in terms of risk management. [/quote]

Actually, this is one of the MORE rational decisions I’ve seen by a financial institution in the recent insanity. Pay off the $50K and I bet you’ll see your credit limit on the Barnes & Noble card increase. This is the price you pay for financial gamesmanship. 2.5% on $50K is $1,250 pre-tax. After tax, probably $900 or so. And you’re having to pay down the balance with a minimum payment, so you’re not getting the full $900 in the first place. And we’re assuming you didn’t have to pay a 3% transaction fee to get the $50K, which is highly unusual. All in all seems like waste of time given the hassle involved and the pittance of a return. I mean, why bother? I don’t get it.

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