Monday, April 27, 2009

Credit-Card Issuers: Buy Something or Else!

Copied and Posted by Yi-Xin Jin (Lily)

One of the biggest causes of the financial crisis was that Americans were borrowing (and spending) more money than they could afford to pay back.

So how are credit-card issuers reacting to consumers' attempts to live a more financially responsible lifestyle? They're threatening to cut their credit cards off if they don't spend enough.

Loretta Maxwell of Troy, Mich., thought her credit score of 790 buffered her against most of the fallout of the credit crunch. When Chase (JPM) closed her $6,000-limit card in December without warning after two years of inactivity, she called to fight it. She was unsuccessful. "If you're not using it, they entice you to do so, and then the moment you don't spend enough, they cut your limit," she says. (Chase says it is standard practice is to review inactive accounts. "Inactive cards with large open credit lines present a real risk of fraudulent use and large potential liabilities for Chase," says spokeswoman Stephanie Jacobson.)

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