Cancelling a credit card I've had for over 30 year

[John Ranalletta]

We've had a Shell Citicard for decades. It's one of two active credit cards we use. The other issuer is Chase. Some background:

• The card is only used for gas purchases and small miscellaneous
• The balance usually never exceeds $300
• We pay off all credit cards upon receipt of statement
• We use electronic banking and set up the payment for 4-5 days prior to due date
• Three times this year alone, we've been hit with late fees from Citicard
• In each case, my checking account was charged up to 5 days prior to the date Citicard posted the payment to the account
• In prior instances we called and the charge was forgiven

The latest statement had a $39 late fee assessed to a $220 balance. My bank account was charged on 10/10 and the posting date of the payment was 10/15. Five (5) days to post an electronic payment? Their rep said, "we're having a problem". Okay, you have a problem, but I get the charge? She couldn't explain that away. She offered and did remove the charge. I persisted in my attempt to close the account when she offered to change our billing cycle. Billing cycle? That's not the problem. Then she offered a 4% discount on all grocery and pharmacy purchases for 120 days!!

 

IMO, this is simply a scam. How many cardholders, especially those who don't pay attention to the details, don't notice or don't call to complain?

 

CC companies are ratcheting up the pressure. Write offs are skyrocketing. People who lost access to home equity loans are maxing out their cards just to live.

• credit card loans, 10 months Sep07-thru-Jul-08 ... up + $29.1 billion while
• credit card loans, 10 weeks Aug-08-to-mid-Oct-08 ... up + $32.3 billion

In other words, commercial bank 'exposure' via the total amount of credit card 'loans' outstanding has risen MORE in the last ten WEEKS, than it did in the previous ten MONTHS COMBINED. (weldononline.com)

 

 

 

[Marty Hill]

WOW! I think.

[Dave McReynolds]

I've noticed the same thing. Ten years ago, I would accumulate all my bills and pay them at the end of the month. If I did that now, I would have late fees on half of them. I like to pay my bills electronically, but the scheduled electronic payments are generally 5 days after I make the payment through my computer. This means that if I want to avoid late fees, I essentially have to pay my bills on the day I receive them. I could wait a few days, I guess, but anything more than a few days and zap!

 

One of my two busiest times of the year is Oct 1 - 15. I essentially threw all my bills in a drawer during that time, and paid them all on about Oct 20, with the result that I now have late fees on three of them.

[John Ranalletta]

WOW! I think.

Perhaps my account wasn't profitable enough for them. I charge and monthly pay off an average of $3-5k/ month on my Chase card. We use the same method and timing of payment. Never a problem and customer service tops, especially when the card was compromised earlier this year.

[John Ranalletta]

Dave, I've worked on software teams creating a/r software for the medical industry. You and I both know that electronic payments are posted "hands off" and instantaneously. Hell, Medicare can accept, process and pay claims electronically in minutes. My account should not have been charged unless the transfer was consummated, meaning they had my money for five days before "posting" it to my account.

 

I can only imagine a office of old ladies with 10-key adders, hand posting the payments to the accounts.

[smiller]

I don't know what's going on with me, but I do the same thing as you guys... use an electronic Billpay service and set the transfer to occur around 5 days prior to due date, and my account with the credit card issuer (Citibank and Chase in my case) is always credited the same day of the transfer request (assuming the transfer date is a business day, of course.) No delay at all.

[subvet]

had a Sears card for > 20 years. Similar situation several years ago when I was hit with a $20 late fee on a balance of < $3. I still shop there but will not use their credit.

 

[John Ranalletta]

I've never seen a 5 day lag in posting charges to the account.

[rob1100r]

Gotta love those 'Money Lenders'...

[Dave McReynolds]

I don't know what's going on with me, but I do the same thing as you guys... use an electronic Billpay service and set the transfer to occur around 5 days prior to due date, and my account with the credit card issuer (Citibank and Chase in my case) is always credited the same day of the transfer request (assuming the transfer date is a business day, of course.) No delay at all.

 

I use electronic bill pay through Quickbooks, so I can post my accounts and pay my bills with only one entry. When I write an electronic check through Quickbooks, a notification from the B of A pops up telling me when the earliest date is that it can be paid, which is usually 5 days or more after I write the check. OTOH, once the check is issued by B of A, credit from the vendor seems to be more or less instantaneous, unless it is some vendor that requires a paper check from B of A.

 

So for example, if I put off paying my Visa until a few days before it is due, I can't pay it electronically through Quickbooks or the payment will be late. So I have to write out a manual check and deliver it down to B of A in person, where they will stamp my receipt and give me credit for making the payment the same day.

 

The way you do it would work fine for me to: I could enter the transaction earlier and schedule it for payment just before the due date, provided I entered it early enough for it to be processed by B of A, but that would require me to be organized, which is not one of my defining characteristics.

[Laura]

had a Sears card for > 20 years. Similar situation several years ago when I was hit with a $20 late fee on a balance of < $3. I still shop there but will not use their credit.

 

We have a Sears card and just got a note from them saying they are lowering our credit limit because we don't use the card enough. You know..."based on your usage we find yada, yada, yada"

 

Now, that pisses me off because it could have the potential to affect our credit rating and we've done nothing wrong....we just didn't buy on credit enough...huh?

 

Now we're being penalized for not using credit cards?

[StuGotz]

Penalize THEM for not using you...Cancel your card.

 

MB>

[John Ranalletta]

Sears isn't the problem. Citicard is the issuer.

 

[AviP]

It's called EOD processing for End-of-Day and for meaningless reasons, many banks will process your electronic payment at the EOD. So it goes into next day's processing and the same could happen at the receiving end. And so on and so forth, it is possible (usually the exception) that a simple electronic payment via your bank could be slower than a check you put in the mail to your local utility.

 

Unfortunately most business or I.T. managers are useless in resolving or streamlining process flow issues. They are too busy protecting their a$$es and their glorified bonuses.

[ghaverkamp]

We have a Sears card and just got a note from them saying they are lowering our credit limit because we don't use the card enough. You know..."based on your usage we find yada, yada, yada"

 

Now, that pisses me off because it could have the potential to affect our credit rating and we've done nothing wrong....we just didn't buy on credit enough...huh?

 

Now we're being penalized for not using credit cards?

 

You're not making the issuer any money when you're not using them; on the other hand, you're exposing them to the potential for greater cash outlays at random. My understanding is that this has become fairly commonplace. (Hasn't happened to me yet, though I haven't checked my Sears account in months and haven't used it in years.)

[Frustrated_Diver]

Cancel both cards and go to your local credit union and get a Visa card there. Never in almost 30 years have i had a problem with fees from them. Yes, i don't get cash back and i don't get points for unredeemable airfares and the rate is a bit higher than the "big" cards. What i get is no annual fee and a place that kinda cares about me as a customer. Since you pay your bill monthly what do you care what the finance charge is?

[John Ranalletta]

Cancel both cards and go to your local credit union and get a Visa card there. Never in almost 30 years have i had a problem with fees from them. Yes, i don't get cash back and i don't get points for unredeemable airfares and the rate is a bit higher than the "big" cards. What i get is no annual fee and a place that kinda cares about me as a customer. Since you pay your bill monthly what do you care what the finance charge is?

Last first...it wasn't finance charges but late charges, inappropriately levied.

 

Your credit union card only has the credit union's name on the front. Likely, it's issuer is either Chase or Citicorp if it's a Visa or MC.

[motoguy128]

Your credit union card only has the credit union's name on the front. Likely, it's issuer is either Chase or Citicorp if it's a Visa or MC.

 

That might be true for very small credit unions, but larger ones don't normally go to a secondary market for consumer loans, they put them on their own books. With mine at least, they are providing the loan and administer the account. While I've had some issues with most of my credit cards at one time, I've never had any issues or fees with my credit union Visa. They've even allowed up to a 110% of the available credit when I was a young, dumb, struggling college student.

 

Actually I use my credit union mainly because of it's excellent customer service as much as it's favorable rates and terms.

 

A single "Ooops" moment being late by a few days (after making double payments for the last 14 months)on a Bank of America loan cost me over $400 in fees and penalties. I've since "recovered" that money by paying off that loan earlier than I had planned. In the long run, it actually cost them more by losing a long term credit addict...err..customer.

[Ron_B]

Like John and others here, I always pay the complete balance on all my cards every month. The only way the issuing banks make any money off me is the 1 or 2 times a year that I stupidly make a payment a couple days late and get socked with a late payment. Like Subvet, I once paid 30-some dollars for being 1 day late on a card with a 17 dollar balance.

 

Still, I wonder if my statement above, "the only way the issuing banks make any money off me" is wrong. Don't retailers pay something to the issuing banks every time a card is used?

[Woodie]

Banks do make a percentage from retailers as a processing fee. The fee percentage varies with the type of transaction and type of retailer.

 

B of A was "kind" enough to permit us to go several thousand over our limit the other month (I grabbed the wrong card!) That has cost us quite a bit, between over-the-limit fees, increased rate (automatically went up to the max, despite their verbal assurance that it wouldn't ). Heading the CU card as fast as I can! (wondering why I didn't do it earlier! )

[Joe Frickin' Friday]

Still, I wonder if my statement above, "the only way the issuing banks make any money off me" is wrong. Don't retailers pay something to the issuing banks every time a card is used?

 

Yes, they do. My understanding is it's anywhere from 1-4 percent, depending on who the players are. This is how the card can afford to give you cash back or frequent-flyer miles or other premiums.

 

With one small vendor from whom I regularly make very large purchases, I now pay by check instead of CC, and he discounts the grand total by a couple of percent. Technicaly they're not supposed to do that, but c'est la vie.

[Silver Surfer/AKAButters]

I pay all of my bills on line through the B of A, schedule the payments on the due date, or Friday if the due date is on the weekend, and have never had a late payment.

 

Highly recommended.

[Ken H.]

We gave up on Citicard several years ago. We had two cc accounts and they were forever posting our (in full) payments to the wrong card and dinging us for late fees. Regardless of how we made the payment, via Quicken or send them a cheque with the account number on it and payment slip. When I called they would always fix it of course, but I got tired of the hassle and told them so long!

[motoguy128]

The Card issuers do make a fee off the retailers fees. Some of the moeny of course goes ot VISA, MC, etc. and is used for advertsing and profit. This is how many banks are offering high yeild checking accounts with a Visa check card. Ours pays 6%, but we have to use it at least 12 times per months... which isn't hard to do if you're in the habit of using CCs or DCs for purchases.

[Laura]

Penalize THEM for not using you...Cancel your card.

 

MB>

 

Unfortunately this could negatively affect my credit rating even more than them just reducing my credit limit. Because credit ratings are based on many things including credit to debt ratio the fact that I have credit but no debt brings my rating up. If I cancel the card that is less credit I show and the ratio drops so this could drop my rating a few points.

 

About two weeks before we received this notice from Sears, Suze Orman had a show where she was explaining that this is becoming very common.

 

 

 

 

 

 

[motoguy128]

Penalize THEM for not using you...Cancel your card.

 

MB>

 

Unfortunately this could negatively affect my credit rating even more than them just reducing my credit limit. Because credit ratings are based on many things including credit to debt ratio the fact that I have credit but no debt brings my rating up. If I cancel the card that is less credit I show and the ratio drops so this could drop my rating a few points.

 

About two weeks before we received this notice from Sears, Suze Orman had a show where she was explaining that this is becoming very common.

 

 

 

 

 

True, but unless you plan on taking out any new loans soon, the score will recoever quickly... IF... you are making progress on paying down your existing debt. I'll admit, that's easier said than done. I think those that have always made good financial decisions or have been lucky enough to aquire a certain level of wealth don't realize how hard it can be.

 

You could at least, transfer the balance on that loan ot another one... and NOT cancel the card. Actually leavign hte account open is even better if there aren't any annual fees because they waste resources just managing the account but making no money off of it.

[Laura]

Penalize THEM for not using you...Cancel your card.

 

MB>

 

Unfortunately this could negatively affect my credit rating even more than them just reducing my credit limit. Because credit ratings are based on many things including credit to debt ratio the fact that I have credit but no debt brings my rating up. If I cancel the card that is less credit I show and the ratio drops so this could drop my rating a few points.

 

About two weeks before we received this notice from Sears, Suze Orman had a show where she was explaining that this is becoming very common.

 

 

 

 

 

True, but unless you plan on taking out any new loans soon, the score will recoever quickly... IF... you are making progress on paying down your existing debt. I'll admit, that's easier said than done. I think those that have always made good financial decisions or have been lucky enough to aquire a certain level of wealth don't realize how hard it can be.

 

You could at least, transfer the balance on that loan ot another one... and NOT cancel the card. Actually leavign hte account open is even better if there aren't any annual fees because they waste resources just managing the account but making no money off of it.

 

Yes, it's just a Sears card and I owe for a washing machine I just bought which will be paid off very soon. I'll leave the card open, there are no annual fees.

 

My score is in good shape so I'm not concerned about the small drop this credit limit decrease will make however there are others that I'm sure will be adversely affected by the credit card companies doing this and it's just not right.

[ian408]

What amazes me is that your e-payment is usually paid (by the bank) electronically. This means if you get it in today, it should be paid almost immediately given they debit your bank account immediately.

 

Oh wait. The float--that's how they made record profits. Float and fees.

 

Sorry for the sarcasm.

[beemerboy]

Penalize THEM for not using you...Cancel your card.

 

MB>

 

Indeed. Last year I canceled a MBNA card I'd had since '83. Why? I never used it and wanted to "clean up" my credit file so I called them to do the deed and got handed off to a special account rep.

 

This rep would simply not accept my request to cancel the card and resorted to an extreme sarcastic and badgering manner towards the end. I eventually got my way but not before wasting a lot of time on the phone.