my credit card has been "upgraded"

[simple girl]

Hmmmm...received a notice that my cc has been "upgraded", with additional benefits like points for purchases, etc., at no cost to reward me for being a "valued customer". However, the small print reveals:

"as a result of this upgrade, your account will have a revolving line, rather than a preset limit. This does not mean that all transactions will be approved. We will consider transactions for approval on an individual basis, including transactions in excess of the revolving line....Your revolving line, which may also be referred to as a credit limit, will be disclosed to you when you receive your card, and generally, on each monthly statement. We may change your revolving line from time to time."

We only use this card for a few hundred bucks (if that) every month, and always pay it (and our other major cc) off in full every month. I read that with a revolving line, they report my highest balance to the credit report agencies. So if we hold a low or $0 balance, that is reported, and it will negatively affect our credit score.

I have the option of not participating in this upgrade, but I have to call to opt out. What a pain. I plan to opt out...unless someone here tells me the info above is incorrect and/or it is better to have a revolving line of credit than a preset spending limit. Feedback?

 

[Danmar]

why don't you just ignore them and get another(new) card? How is the revolving credit different than having a credit limit? why do you care so much about your credit limit if you don't borrow much?

 

[Redbugdave]

My first impression is to opt out. I don't like the idea of not having approvals on some transactions, etc. All that sounds fishy to me. I like a square set of rules.

I am suspicious when a bank wants to do anything for you. It's all about what more they can squeeze out of you.

We are the same way as you with the credit card. Always a zero balance at the end of the billing cycle. Funny you mentioned this...my bank wants to raise my limit. It may be the same thing going on here, too. Now, I need to check into mine!

Hopefully, one of the others can respond with facts. Maybe I am wrong.

 

[MasterBlaster]

Banks can use this type approach (varying revolving line) to balance the risk they hold.

Since the rules require them to let you pay off your card on the old terms, they use this approach to minimize their downside risk.

What you see is that if there is any indication of your creditworthiness going down then your credit line will be reduced.

It's not a bad reflection on you, it's just the banks reaction to the current credit rules.

 

[freebird5825]

I found this definition
Revolving Line of Credit Definition

to make sure I understood what "revolving line of credit" meant.

I guess I'm confused why your credit card company is using terminology that seems redundant to me. Is this something related to the laws passed for credit card reform?

 

[simple girl]

why don't you just ignore them and get another(new) card? How is the revolving credit different than having a credit limit? why do you care so much about your credit limit if you don't borrow much?

If I ignore them they automatically upgrade me. I don't want or need a new card. I don't care about my credit limit, but I do care about my credit score. It's very good, and we want to keep it that way.

Here's an article which explains the topic much better than I can: Credit cards that hurt your credit score (Page 1 of 2)

My first impression is to opt out. I don't like the idea of not having approvals on some transactions, etc. All that sounds fishy to me. I like a square set of rules.

I am suspicious when a bank wants to do anything for you. It's all about what more they can squeeze out of you.

I totally agree...don't trust them wanting to do something nice for me...especially when the change in the way the credit is handled is only revealed if you read the fine print. Red flag to me!

 

[FreeAtLast]

I would Opt-Out. When was the last time that a bank or cc company did something that was truly in your best interest? I am sure there is a hidden agenda which is probably too time consuming for you to figure out. I never like having the rules change in the middle of the game.

 

[omni550]

On a similar note, PenFed recently raised the limit on my Visa credit card to $50K. I wondered why they did it.

I always pay off my credit cards every month.

In light of this thread, several questions now spring to mind:Why did they raise the limit? How does it impact me/my credit rating? Should I request that it be lowered?

Any input/ideas?

omni

 

[simple girl]

On a similar note, PenFed recently raised the limit on my Visa credit card to $50K. I wondered why they did it.

I always pay off my credit cards every month.

In light of this thread, several questions now spring to mind:Why did they raise the limit? How does it impact me/my credit rating? Should I request that it be lowered?

Any input/ideas?

omni

Doesn't sound like it should be an issue for you, according to this article, but I'm by no means an expert on this. Hopefully others will weigh in on the subject.

How high should your credit limit be? - Sep. 25, 2008

 

[omni550]

Based on the article simple girl just posted, PenFed may have been monitoring my recent few months of usage (which had been considerably higher than my usual month-to-month purchases due to travel, some larger purchases, etc.) and raised my limit to give me a more favorable debt-to-limit ratio.

I was just a bit surprised as they jumped the limit from 15K to 50K. My usage was nowhere near the original 15k limit, not even 30% of that, IIRC.

omni

 

[LightningDawg]

On a similar note, PenFed recently raised the limit on my Visa credit card to $50K. I wondered why they did it.

I always pay off my credit cards every month.

In light of this thread, several questions now spring to mind:Why did they raise the limit? How does it impact me/my credit rating? Should I request that it be lowered?

Any input/ideas?

omni

Actually, having a higher credit limit helps as it lowers the percent of available credit used, which is good.

 

[GregLee]

I always pay off my credit cards every month.

In light of this thread, several questions now spring to mind:Why did they raise the limit?

Here's a theory: you paying off your cards every month is not good for them, and they want to lure you into making such large credit purchases that you can't pay them off every month. A 50k limit might be high enough that you could be induced to put a car purchase on your card, e.g., instead of getting a conventional auto loan.

 

[Amethyst]

Oh, if only! Imagine getting 1% cash back on a car purchase, that I pay off with a check the following month! But it won't happen, because the car dealers don't want to pay 3% or 4% to the credit card company.

Our roofer charges 1.5% extra if you pay by credit card, which is why we will be paying him by check

Amethyst

H A 50k limit might be high enough that you could be induced to put a car purchase on your card, e.g., instead of getting a conventional auto loan.

 

[TromboneAl]

I had the same thing to say a while ago:

http://www.early-retirement.org/forums/f27/congratulations-youve-been-upgraded-55608.html

However, we didn't have the option of opting out.

 

[simple girl]

I had the same thing to say a while ago:

http://www.early-retirement.org/forums/f27/congratulations-youve-been-upgraded-55608.html

However, we didn't have the option of opting out.

Very interesting - mine also is BofA, and upgrading also to a World MasterCard. Strange that they now are offering an opt-out...maybe enough people c/o'd or threatened some kind of suit for no opt-out

 

[GregLee]

Oh, if only! Imagine getting 1% cash back on a car purchase, that I pay off with a check the following month! But it won't happen, because the car dealers don't want to pay 3% or 4% to the credit card company.

Maybe it won't, now, but I paid for my current car about 6 years ago using a cash-advance type check on my credit account. I think it was just like any cash check, for the car dealer, and no cash-back for me.

 

[scrabbler1]

My credit card's limit has crept up over the years from about $5,000 to $7,000, not that I have ever been close to charging that much in one month. I had one big month in 2007 when it was around $2,000 but that was a record amount due to a bunch of things coming together at one time.

I would be suspicious of a bigger change such as the one the OP described. I don't see any upside to switching, and the OP doesn't see any downside to opting out. Therefore, opt out.

 

[simple girl]

Well I called and opted out. Of course, they tried to engage me in a discussion to convince me otherwise, and then after that tried to sell me on 2 additional things. One was 0% interest on my card until a certain date - "don't you have anything you want to finance or something you have a loan on that you'd like to transfer?" uh-no...we pay everything in full every month and our only loan is our mortgage (doubt they hear that too often). "Do you have some big purchase coming up that you wouldn't be able to pay off in a month?" Wow, they are so persistent! Then, he tries to sell me on adding another card to my account for cash back promo. Nadda, got that covered with another card I'm quite happy with.

Uggh. Glad that phone call is done!

 

[TromboneAl]

I'm debating whether to call and ask whether I can now opt out -- I'm not sure it's worth the aggravation.

 

[scrabbler1]

Simple Girl, baffling a credit card issuer by going "off the script" is something I can relate to.

Back in the early 1990s, I signed up for a Discover Card because at the time Sears did not accept major credit cards (Visa, MC) and I was unable to buy anything from them without using cash. But soon thereafter, Sears changed its policy and I put the Discover Card away and never used it.

One day, a few years later, some Discover rep called me with some special offer. I told the rep I was not interested, along with the (now moot) reason I signed up for it. The rep gave me a bunch of extra inducements but I balked. I then told her I had never used the card and never even signed the card since I got it. She gave up and quickly said good-bye.

Some time later, I told this story to a friend of mine at the time who happened to work for a bank's credit card department. I told her about the conversation and she told me they have a script they read from whenever a customer gives a certain, typical reply. But my "I never signed the card and never used the card" reply was not anywhere on that script which is why the rep knew to give it up and end the call.

Fast forward to 2009 and I still never signed or used the card. Discover finally wrote me to tell me they were going to close the card for inactivity. Really? But I still get mailings from them once in a while trying to woo me back? Really.

 

[simple girl]

I'm debating whether to call and ask whether I can now opt out -- I'm not sure it's worth the aggravation.

I can totally understand, especially since you'd have even more of an uphill battle than me - since you didn't get the letter with the option in it...tough call!

Simple Girl, baffling a credit card issuer by going "off the script" is something I can relate to.
...
Some time later, I told this story to a friend of mine at the time who happened to work for a bank's credit card department. I told her about the conversation and she told me they have a script they read from whenever a customer gives a certain, typical reply. But my "I never signed the card and never used the card" reply was not anywhere on that script which is why the rep knew to give it up and end the call.

Fast forward to 2009 and I still never signed or used the card. Discover finally wrote me to tell me they were going to close the card for inactivity. Really? But I still get mailings from them once in a while trying to woo me back? Really.

That is a funny story! I'll have to think of more "off script" replies to have on hand the next time I have to deal with one of these calls. Dang, wish I would have lied and told him our mortgage was all paid off, too...LOL. That woulda really stumped him. It's easy to forget how those of us on this forum are truly in the minority when it comes to responsible financial behavior.

 

[GregLee]

That is a funny story! I'll have to think of more "off script" replies to have on hand the next time I have to deal with one of these calls.

A few years ago, I decided that listening to these spiels for the sake of politeness was really not doing any favor to the poor soul in the call-center, so now I end them very quickly. It's just: No, sorry, I'm not interested, thanks. Then I hang up immediately. It only takes a few seconds.

 

[simple girl]

A few years ago, I decided that listening to these spiels for the sake of politeness was really not doing any favor to the poor soul in the call-center, so now I end them very quickly. It's just: No, sorry, I'm not interested, thanks. Then I hang up immediately. It only takes a few seconds.

True, that is how I usually handle it, too...but I needed this guy to file my opt out papers...gah! He had a captive audience and tried to make the best of it. LOL

 

[scrabbler1]

A few years ago, I decided that listening to these spiels for the sake of politeness was really not doing any favor to the poor soul in the call-center, so now I end them very quickly. It's just: No, sorry, I'm not interested, thanks. Then I hang up immediately. It only takes a few seconds.

I don't give them the time I used to way back then, either. I often get calls from my phone company and cable TV company wanting me to buy one of their costlier "bundles" of phone/cable/internet services I now have parts of from each one. I am no longer afraid to say no thanks and hang up on them mid-sentence.

 

[MasterBlaster]

A few years ago, I decided that listening to these spiels for the sake of politeness was really not doing any favor to the poor soul in the call-center, so now I end them very quickly. It's just: No, sorry, I'm not interested, thanks. Then I hang up immediately. It only takes a few seconds.

We always say - please put on your "Do Not Call" list before hanging up.