CHESSNOID

As the banks and credit card companies continue to struggle with higher defaults, they are adopting a strategy of closing out credit card accounts preemptively.   The idea is if you are not extended any credit then you can not default.

You would question how will they make money then.  They will continue to make money with revenues of customers already committed to making payments on existing balances.  They will continue to ask for taxpayer money through government bailouts.  Then they will layoff employees to cut some expenses and that will enable them to show a profit.  The truth is sickening but that is what they have demonstrated with their actions.

Associated Press:

NEW YORK — Shannon Burdette tried to pay with her Shell Mastercard after filling up her gas tank this weekend but found the card rejected.

Confused, she called the customer service line on the back of the card, issued by Citibank, and was told the account was closed because of something that appeared on her credit report. But when the Sykesville, Md., resident got a copy of her credit report online, the only negative thing she saw was “closed at credit grantor’s request” on the Shell MasterCard account.

“They said there was a routine review,” said Burdette, who maintained that she and her husband, Brian, used the card regularly and always paid the bill on time.

Burdette isn’t alone. People across the country have been reporting similar experiences in postings on various consumer Web sites.

Citi confirmed the basics. The bank said in a statement it “decided to close a limited number of oil partner co-branded MasterCard accounts.” That includes not only Shell, but Citgo, ExxonMobil and Phillips 66-Conoco cards.

The close date was Wednesday, and letters were sent out Monday to customers informing them of the change, a Citi spokesman said. The bank would not say how many cards were shut down or how much available credit they represented.

But unlike the bank’s move to shut down its Home Depot cards, Citi did not discontinue the sale of these cards altogether. It is still accepting applications, promising rewards like 3 percent cash back on fuel purchases and 1 percent cash back on other spending.

It is hard not to take it personally if you are one of the victims of these credit card companies. You pay them on time and have been loyal, yet they make a business decision that flags you as a bad risk even though you have already proven yourself to be a good risk.

In fact, Citi posted $8 billion in consumer credit losses for its third quarter last week, including both mortgages and credit cards. Like many banks with big consumer lending portfolios, Citi is expecting defaults on credit cards to rise in coming months. Credit card delinquencies typically track the unemployment rate, which is at 9.8 percent and is expected to top 10 percent soon.

It is definitely not fair considering they used taxpayer money to help themselves out. This is just another reason why I am against these government bailouts.