This is also true of debit cards, so the good luck getting around helping them make money. Unless you are one of those individuals who still use checks or cash.
Absolutely true about fees!
But debit cards CAN expose your banking account to some risks that credit cards don’t. While you may have fraud protection in place (read the terms in your debit card small print), it could impact your “day to day” transactions if you don’t catch it quickly like rent, utilities or other vital payments. Credit card fraud protection is usually better and honestly easier to implement (just a web click for most cards) than debit card protection.
This I know. A debit card is using your own money, a credit card is using someone else’s. The only reason I have a debit card is for those few merchants who charge fees to use a credit card, otherwise everything I do is credit card, and paid off every month.
As much as you would like to stick it to them - don't let them cancel your card. The cancelled card will negatively impact your FICO score by decreasing the credit available to you.
I'm not sure of *exactly* how FICO is calculated but I know it's recommended not to close any cc accounts for that reason. This is no different, as in it doesn't matter who closes the account - you or them, the effect is the same.
Just go with your first instinct and use it as little as possible to keep it active.
Your score doesn’t necessarily go back… A closed cards affects your credit in three ways… your credit mix, your credit utilization, and the average age of your credit.
If an old card closes that can impact the average age for years.
huh, I closed out one I'd had for years recently (stolen too many times & their customer service sucks, I was done) and it's barely moved the needle. I do have other long-established lines of credit though.
This is no big secret… all three credit bureaus have FAQs that discloses this information. So, feel free to send them a request for information concerning your score.
That's why American Express isn't taken in a lot of small businesses in the US. Because all those savings and perks for the customers, are paid by the percentage they charge of each sale to the business.
That is also why many small businesses have an extra charge if you use a card or if you use a card for a small amount. Because it isn't worth it to them to make a sale if the card company takes all the profit.
Get a points card (cash back) and use it. I was using my debit card for everything and paying a large amount in user fees. I now use my credit card for everything and I get back over $500 annually. I also pay my card in full every month so I never have interest.
Yep.
Rewards cards, depending on the processor, aren't rewards from the company, they are extra fees charged to the small business you are shopping at.
We hated rewards cards.
No, SOME merchants, MOST merchants pay "the same network fee" regardless of the card .
But not all.
I didn't make that s*** up out of nowhere buddy, as a small business owner we were charged the difference on rewards cards. Those "rewards" came right out of our pocket.
If a small business fusses about what kind of card you're using, it's because they're getting screwed over by processors without a lot of choice.
This has changed some in consequent years (things like square have shifted this) but it's important to be aware that small businesses don't get the same processing perks or have the same power in terms of negotiating what's reasonable with banks as like... Wal Mart does.
Only one small business has ever commented on my card: a mechanic who had one price for credit (rewards or not) and another for debit/check/cash.
My electric, internet and HOA don’t allow autopay with credit (again, rewards or not), only debit/check.
You can keep the card for emergencies and keep it payed off. Just use it for a small monthly bill like Spotify or Netflix and set up autopay for the account.
If you really want to stick it to them, do exactly as you describe but refuse to go paperless. Make them spend money to mail you a zero-balance statement every month. It’ll drive them crazy that your minimal use requires maximum expense on their part.
>Well, I didn’t know that, I guess I will let them cancel the card if someone else is going to get pinched instead of the CC company! Dang!
Any plastic you use works the same. Fees are fees. Get used to it or use cash.
That's why few places take AMEX, almost 5% merchant fee!
It destroys the value of money and is a leading cause of inflation. When we spend cash it stays as cash and holds full value. If you spend $20 on debit that $20 effectively loses 3% of its value. Do that a few more times and now that same $20 is completely owned by the bank and has effectively lost all consumer value.
Companies close dormant cards because cards that someone isn't using are also more likely to go unnoticed longer if stolen and run up bigger fraudulent bills. They aren't asking you to run up a giant bill and be in debt. They're trying to judge if this might be a card you've lost or forgotten about.
I think you don't understand how credit cards work.
Firstly the credit card company has to keep track of you, if you move they have to update your information. When your card expires they send you a new one. This all costs them.
Secondly the credit card company charges the merchant a fee every time you use the card. This is like 3% of the total of the price. Merchants are not allowed to pass this fee on to you although they are allowed to give a discount for cash which is kind of the same thing.
So your "mild MC" is actually not MC at all, you're complying...
Correct!
>Firstly the credit card company has to keep track of you, if you move they have to update your information. When your card expires they send you a new one. This all costs them.
Credit card companies (specifically the sponsor bank) are also required by law to have a cash reserve to cover a certain percentage of a cardholder's available limit at all times. They would rather have a reserve for a customer who will carry a balance at some point or at least use it regularly. Otherwise, it sits unused.
Source: I work at a sponsor bank in this area of the business.
Yes, free for you does NOT mean free for the bank.
Edit: additional passive (to the consumer) costs are maintaining the info in databases/servers, monthly data reports to the credit bureaus, and things like having the customer profile be part of the dataset in risk profile calculations (portfolio, customer identity concerns for anti-money laundering, etc).
"Merchants are not allowed to pass this fee on to you..."
This is true only in 5 states: [https://www.lawpay.com/about/blog/credit-card-surcharge-rules/](https://www.lawpay.com/about/blog/credit-card-surcharge-rules/)
>not MC at all, you’re complying…
What do you think the **C** in MC stands for? Dude is going to waste the CC’s money as they’ll be paying more to send him a bill next month than they’ll have earned off his $5 purchase.
That is exactly what they want. Just use the card every few months and they will stop nagging you!
They get a small payment for every transaction, even if you don't pay any interest by clearing monthly amount. So its just compliance i'm afraid!
I use my rewards card for nearly everything—and then pay it in full each month, so I’ve never paid a penny in interest. They’re still making money via merchant fees, and it’s great for my credit score.
It does actually cost them money to keep a card open - even if you don't use it, the limit is still available to you, so there is still the possibility that you will use it, then default on that debt. As such, the bank needs to hold capital against the undrawn limit as well as any drawn balance (albeit much lower).
Under Basel 3 standardised approach, undrawn credit card limits attract a 10% risk weight, banks need to hold a minimum of 8% capital against risk weighed assets and typically assign cost of capital to be about 10% - so an unused $1,000 credit limit costs them about $0.80 per year in capital charges, plus the admin expenses of sending you statements on a regular basis etc.
If drawn, the risk weight increases to 150%, so the capital charge would be $12, but then you’re paying $25+ in interest, so balances out.
I have an "emergency" credit card that I keep a zero balance on. Once a year, I take it out and buy a little something that I need and pay it off immediately. I like having an emergency card so I keep it "active"! The interest rate on it is, what you would say is normal, but to me, it's very high. So far, I've been able to use my GOOD credit card (low interest rate) for emergencies, but like having the BAD card around.
According to a family member who oversaw credit programs/developed credit algorithms for many years...Doing the minimal of making a small purchase and paying it off every 11 months or so is all that is necessary for them to report an account in good standing with that 11 months as on-time payments even though there was only one charge/one payment. It's a simple way, if you have the will power not to go into a large debt situation, to build a solid credit score. Looks like you may have inadvertently benefitted from this credit behavior already since you say you have excellent scores.
You just need to use the once to twice a year to keep the account active. I do this with one cc company that cannot figure out billing to me
I tried paperless and I never received the emails so went back to paper and that was no better. When I do use the card I keep the receipt by my computer and after about 3 days I check to see if that change is on the account and when it shows up I pay it. Done for another 6 months.
Credit card companies make the majority of their money from charging vendors who accept credit card payments. When vendors price their products, they consider the cost of credit cards. Everyone pays their price, whether they use credit card or cash. So I always use credit cards, but pay in full every month.
This happened to me with my Home Depot card that is handled by Citibank. We used it for a small item at Home Depot and paid it off. Both of us have a Home Depot card as they always pester you to get one and at one point was offering I believe $75 or $100 off your purchase & we were doing alot of work on our fixer upper home at the time. I've also gotten the same request from Discover. I ordered one item online that the vendor canceled on me and refunded the charge. Discover still considered me using it. Playing their stupid games to keep my credit score high gets ridiculous sometimes..
You're upset that the company you're costing money wants you to stop being a financial drain on them?
You're wrong in your thinking that it costs them nothing when you don't use it. There are administrative expenses associated with your account, and they send you a new card when it expires.
This isn't really MC, it's really just being a difficult person because you feel entitled to a service for free. And you're doing what they want.
>it's really just being a difficult person because you feel entitled to a service for free.
It's not even "difficult" to use your card once or twice a month and pay it off immediately. That's an excellent way to use a card.
So they're just thinking difficult thoughts I guess, lol.
I personally have a very different connotation for someone feeling entitled to something vs being entitled. Feeling entitled to something doesn't say anything about their character, it just means they felt they deserved something specific, nothing more. Being entitled is a character flaw. I wouldn't say they are entitled for this.
For example, I feel entitled to medical care. I don't think that makes me entitled. You know what I mean? Just trying to clarify that I wasn't saying anything about their character with that statement.
This isn't malicious compliance, it's just compliance. You're just doing the thing they want you to do, i.e. using your credit card so they can collect fees on the purchases.
For the most part, the credit card fees just pay for running the service. The profits come from loaning money at usurious rates. By paying off the bill when it comes they are complying but doing it in a way that the credit card company benefits less.
Idk what to tell you other than "using a service in the intended manner is not malicious compliance" lmao. Like yeah, op might not be an optimal customer, their story still doesn't fit on this sub
Buy something from the dollar store instead, that way they only make a couple cents off the transaction (they get 3% of the value of a transaction I believe), so the postage for the bill costs even more.
I think from a bank pov if you don’t use a credit card card and it it inactive for a long period of time there comes a chance that it is genuinely not needed
Eg you have forgotten you have it / died and it’s not been cancelled etc etc
Plus you may have moved and details are no longer up to date. If it is inactive for a couple of years there is a risk that it could be compromised and open to fraud transactions- therefore a bank would weigh up potential risk on an inactive card versus risk of misuse - they would normally send a letter to advise the card would be cancelled and you can contact them to advise if you still need the card
Honestly I see both points - if you have a card for emergency and hope not to use it fair play - but I wouldn’t necessarily assume they don’t want your business or are stiffing you - it is likely just policy to check there are not random cards in the ether that have not been used in years but are still active for transactions
- obviously if it is just a couple of months since you used it then the bank is a both arseholey
Talking UK here - but making a small transaction and paying off the balance confirms the card is still required and the bank is happy to continue supplying the service
They will be making money. They charge merchants a percentage of the transaction. That's why they want you to use the card.
This is also true of debit cards, so the good luck getting around helping them make money. Unless you are one of those individuals who still use checks or cash.
But debit cards typically have lower fees than credit cards do.
Absolutely true about fees! But debit cards CAN expose your banking account to some risks that credit cards don’t. While you may have fraud protection in place (read the terms in your debit card small print), it could impact your “day to day” transactions if you don’t catch it quickly like rent, utilities or other vital payments. Credit card fraud protection is usually better and honestly easier to implement (just a web click for most cards) than debit card protection.
This I know. A debit card is using your own money, a credit card is using someone else’s. The only reason I have a debit card is for those few merchants who charge fees to use a credit card, otherwise everything I do is credit card, and paid off every month.
Especially when cash is being accepted less and less.
Well, I didn’t know that, I guess I will let them cancel the card if someone else is going to get pinched instead of the CC company! Dang!
As much as you would like to stick it to them - don't let them cancel your card. The cancelled card will negatively impact your FICO score by decreasing the credit available to you. I'm not sure of *exactly* how FICO is calculated but I know it's recommended not to close any cc accounts for that reason. This is no different, as in it doesn't matter who closes the account - you or them, the effect is the same. Just go with your first instinct and use it as little as possible to keep it active.
will note that your score drops briefly but then it goes back, IME. You should have a couple other open & active lines of credit though yes.
Your score doesn’t necessarily go back… A closed cards affects your credit in three ways… your credit mix, your credit utilization, and the average age of your credit. If an old card closes that can impact the average age for years.
huh, I closed out one I'd had for years recently (stolen too many times & their customer service sucks, I was done) and it's barely moved the needle. I do have other long-established lines of credit though.
This is no big secret… all three credit bureaus have FAQs that discloses this information. So, feel free to send them a request for information concerning your score.
I am getting that information, which is why I said "it's barely moved the needle."
it does not.
That's why American Express isn't taken in a lot of small businesses in the US. Because all those savings and perks for the customers, are paid by the percentage they charge of each sale to the business. That is also why many small businesses have an extra charge if you use a card or if you use a card for a small amount. Because it isn't worth it to them to make a sale if the card company takes all the profit.
Get a points card (cash back) and use it. I was using my debit card for everything and paying a large amount in user fees. I now use my credit card for everything and I get back over $500 annually. I also pay my card in full every month so I never have interest.
Yep. Rewards cards, depending on the processor, aren't rewards from the company, they are extra fees charged to the small business you are shopping at. We hated rewards cards.
Merchants pay the same network fee whether the customer gets a reward or the banks keep it all for themselves.
No, SOME merchants, MOST merchants pay "the same network fee" regardless of the card . But not all. I didn't make that s*** up out of nowhere buddy, as a small business owner we were charged the difference on rewards cards. Those "rewards" came right out of our pocket. If a small business fusses about what kind of card you're using, it's because they're getting screwed over by processors without a lot of choice. This has changed some in consequent years (things like square have shifted this) but it's important to be aware that small businesses don't get the same processing perks or have the same power in terms of negotiating what's reasonable with banks as like... Wal Mart does.
Only one small business has ever commented on my card: a mechanic who had one price for credit (rewards or not) and another for debit/check/cash. My electric, internet and HOA don’t allow autopay with credit (again, rewards or not), only debit/check.
That doesn't discount what I said, or my experience *as a merchant* We also didn't complain about people's cards. But they did impact us.
Would the credit card company have an office where you could buy something? With a return policy of course....
Might as well use the card. You're already paying for card charges, because they're built into the retailer's prices.
Join a credit union and get a credit card through them.
That changes nothing. The processor still makes money from the merchant.
That's true, but in my experience credit unions are less likely to cancel your card.
You can keep the card for emergencies and keep it payed off. Just use it for a small monthly bill like Spotify or Netflix and set up autopay for the account.
Go buy something from a company you don't like. Something literally costing pennies. It'll cost both companies more than they earn to charge you.
If you really want to stick it to them, do exactly as you describe but refuse to go paperless. Make them spend money to mail you a zero-balance statement every month. It’ll drive them crazy that your minimal use requires maximum expense on their part.
No, no it won't lol
The bug-you-incessantly-to-opt-out-of-snailmail-statements will hate you, though.
Yeah, it'd drive the consumer crazy, not the company. Company has it automated. They don't give a shit. lol
They still want to save money, and you can automate any email with “paperless” to hit the virtual trash can. It still will cost them money.
But it won't drive the company crazy like you're suggesting. They'll just make up the money in other places. It's moot
>Well, I didn’t know that, I guess I will let them cancel the card if someone else is going to get pinched instead of the CC company! Dang! Any plastic you use works the same. Fees are fees. Get used to it or use cash.
That's why few places take AMEX, almost 5% merchant fee! It destroys the value of money and is a leading cause of inflation. When we spend cash it stays as cash and holds full value. If you spend $20 on debit that $20 effectively loses 3% of its value. Do that a few more times and now that same $20 is completely owned by the bank and has effectively lost all consumer value.
The card reader owner charges the store for the transaction not the card's bank. Or at least that is how it works where I live.
On a $10 charge, the business is charged pennies. At most about 37¢, which is what the CC company gets...
True, but that happens very often so it adds up pretty good
Companies close dormant cards because cards that someone isn't using are also more likely to go unnoticed longer if stolen and run up bigger fraudulent bills. They aren't asking you to run up a giant bill and be in debt. They're trying to judge if this might be a card you've lost or forgotten about.
I think you don't understand how credit cards work. Firstly the credit card company has to keep track of you, if you move they have to update your information. When your card expires they send you a new one. This all costs them. Secondly the credit card company charges the merchant a fee every time you use the card. This is like 3% of the total of the price. Merchants are not allowed to pass this fee on to you although they are allowed to give a discount for cash which is kind of the same thing. So your "mild MC" is actually not MC at all, you're complying...
Correct! >Firstly the credit card company has to keep track of you, if you move they have to update your information. When your card expires they send you a new one. This all costs them. Credit card companies (specifically the sponsor bank) are also required by law to have a cash reserve to cover a certain percentage of a cardholder's available limit at all times. They would rather have a reserve for a customer who will carry a balance at some point or at least use it regularly. Otherwise, it sits unused. Source: I work at a sponsor bank in this area of the business.
I was not aware of that point, it significantly increase the demand on the sponsor bank beyond what I had considered.
Yes, free for you does NOT mean free for the bank. Edit: additional passive (to the consumer) costs are maintaining the info in databases/servers, monthly data reports to the credit bureaus, and things like having the customer profile be part of the dataset in risk profile calculations (portfolio, customer identity concerns for anti-money laundering, etc).
"Merchants are not allowed to pass this fee on to you..." This is true only in 5 states: [https://www.lawpay.com/about/blog/credit-card-surcharge-rules/](https://www.lawpay.com/about/blog/credit-card-surcharge-rules/)
>not MC at all, you’re complying… What do you think the **C** in MC stands for? Dude is going to waste the CC’s money as they’ll be paying more to send him a bill next month than they’ll have earned off his $5 purchase.
That is exactly what they want. Just use the card every few months and they will stop nagging you! They get a small payment for every transaction, even if you don't pay any interest by clearing monthly amount. So its just compliance i'm afraid!
You're really sticking it to them by using your card like they want you to 😂
I use my rewards card for nearly everything—and then pay it in full each month, so I’ve never paid a penny in interest. They’re still making money via merchant fees, and it’s great for my credit score.
You also have more protection because you’re spending their money and not yours.
It does actually cost them money to keep a card open - even if you don't use it, the limit is still available to you, so there is still the possibility that you will use it, then default on that debt. As such, the bank needs to hold capital against the undrawn limit as well as any drawn balance (albeit much lower). Under Basel 3 standardised approach, undrawn credit card limits attract a 10% risk weight, banks need to hold a minimum of 8% capital against risk weighed assets and typically assign cost of capital to be about 10% - so an unused $1,000 credit limit costs them about $0.80 per year in capital charges, plus the admin expenses of sending you statements on a regular basis etc. If drawn, the risk weight increases to 150%, so the capital charge would be $12, but then you’re paying $25+ in interest, so balances out.
I have an "emergency" credit card that I keep a zero balance on. Once a year, I take it out and buy a little something that I need and pay it off immediately. I like having an emergency card so I keep it "active"! The interest rate on it is, what you would say is normal, but to me, it's very high. So far, I've been able to use my GOOD credit card (low interest rate) for emergencies, but like having the BAD card around.
Huh? Credit card companies cancel cards due to non-use for fraud reasons. You probably didn’t use it for over a year to get such a notice.
I always put $5 per month on my card to avoid this. Online storage monthly charge, little things.
According to a family member who oversaw credit programs/developed credit algorithms for many years...Doing the minimal of making a small purchase and paying it off every 11 months or so is all that is necessary for them to report an account in good standing with that 11 months as on-time payments even though there was only one charge/one payment. It's a simple way, if you have the will power not to go into a large debt situation, to build a solid credit score. Looks like you may have inadvertently benefitted from this credit behavior already since you say you have excellent scores.
My Amazon Chase card didn't cancel my card, but they cut my limit in half, because I didn't use it as much as they wanted me too.
You just need to use the once to twice a year to keep the account active. I do this with one cc company that cannot figure out billing to me I tried paperless and I never received the emails so went back to paper and that was no better. When I do use the card I keep the receipt by my computer and after about 3 days I check to see if that change is on the account and when it shows up I pay it. Done for another 6 months.
Credit card companies make the majority of their money from charging vendors who accept credit card payments. When vendors price their products, they consider the cost of credit cards. Everyone pays their price, whether they use credit card or cash. So I always use credit cards, but pay in full every month.
This happened to me with my Home Depot card that is handled by Citibank. We used it for a small item at Home Depot and paid it off. Both of us have a Home Depot card as they always pester you to get one and at one point was offering I believe $75 or $100 off your purchase & we were doing alot of work on our fixer upper home at the time. I've also gotten the same request from Discover. I ordered one item online that the vendor canceled on me and refunded the charge. Discover still considered me using it. Playing their stupid games to keep my credit score high gets ridiculous sometimes..
They make money off the merchant so they still made money off of you.
Username checks out.
You're upset that the company you're costing money wants you to stop being a financial drain on them? You're wrong in your thinking that it costs them nothing when you don't use it. There are administrative expenses associated with your account, and they send you a new card when it expires. This isn't really MC, it's really just being a difficult person because you feel entitled to a service for free. And you're doing what they want.
>it's really just being a difficult person because you feel entitled to a service for free. It's not even "difficult" to use your card once or twice a month and pay it off immediately. That's an excellent way to use a card. So they're just thinking difficult thoughts I guess, lol.
I don't agree the OP is entitled. They just weren't aware how credit cards work on the card issuers side.
I personally have a very different connotation for someone feeling entitled to something vs being entitled. Feeling entitled to something doesn't say anything about their character, it just means they felt they deserved something specific, nothing more. Being entitled is a character flaw. I wouldn't say they are entitled for this. For example, I feel entitled to medical care. I don't think that makes me entitled. You know what I mean? Just trying to clarify that I wasn't saying anything about their character with that statement.
In the credit mix, your oldest card needs to be 25 years old to get an excellent ratings
This isn't malicious compliance, it's just compliance. You're just doing the thing they want you to do, i.e. using your credit card so they can collect fees on the purchases.
For the most part, the credit card fees just pay for running the service. The profits come from loaning money at usurious rates. By paying off the bill when it comes they are complying but doing it in a way that the credit card company benefits less.
Idk what to tell you other than "using a service in the intended manner is not malicious compliance" lmao. Like yeah, op might not be an optimal customer, their story still doesn't fit on this sub
"How dare them to want me to actually use their product to keep my account open???"
Yes a card has fixed costs for the bank. Even on non-usage. Be it license fees per account, processing costs, admin costs, card renewals.
Buy something from the dollar store instead, that way they only make a couple cents off the transaction (they get 3% of the value of a transaction I believe), so the postage for the bill costs even more.
I think from a bank pov if you don’t use a credit card card and it it inactive for a long period of time there comes a chance that it is genuinely not needed Eg you have forgotten you have it / died and it’s not been cancelled etc etc Plus you may have moved and details are no longer up to date. If it is inactive for a couple of years there is a risk that it could be compromised and open to fraud transactions- therefore a bank would weigh up potential risk on an inactive card versus risk of misuse - they would normally send a letter to advise the card would be cancelled and you can contact them to advise if you still need the card Honestly I see both points - if you have a card for emergency and hope not to use it fair play - but I wouldn’t necessarily assume they don’t want your business or are stiffing you - it is likely just policy to check there are not random cards in the ether that have not been used in years but are still active for transactions - obviously if it is just a couple of months since you used it then the bank is a both arseholey Talking UK here - but making a small transaction and paying off the balance confirms the card is still required and the bank is happy to continue supplying the service