Caveat emptor: Your credit limit, rate may have changed
I’ve had a few complaints from customers of Sears, American Express and Capital One – all U.S.-owned companies that may be more affected by the credit crisis than Canadian card issuers.
V.P. (I’m using initials for privacy) had a shock when he checked his Sears MasterCard account online.
The credit limit, formerly $10,000, had been reduced to $500.
Chase Canada, which bought Sears’ credit card arm in 2005, said credit limits are reviewed on a regular basis.
"Chase is continuously evaluating whether our customers’ credit lines are appropriate for their needs and will make adjustments accordingly," spokeswoman Gail Hurdis said.
C.M. had a similar experience with her Sears credit card, whose limit was cut to $500 from $9,500.
"I currently have a zero balance on that account," she says.
"I think I was targeted because I was late with a payment of $34.74."
C.M. had moved last May, which resulted in her Sears bill being dropped off at a neighbour’s house. It was caught in transition before the change of address kicked in.
She forgot about the $34.74 balance, which she cleared up shortly after the payment deadline.
"As a careful and responsible lender, we constantly evaluate the risks and costs of funding credit card loans," Chase spokeswoman Laura Rossi said.
"We may lower lines for customers who are showing signs of increased risk or inactivity."
To which CM replied: "In my case, their cost of funding credit card loans has been basically zero for the past few years. Maybe that’s their issue – nothing to gain?"
A.V. has an American Express card with no preset spending limit. But the balance must be paid in full each month cash advances.
After charging $3,663 to her Amex card last April, she got several calls about her spending.
"No preset spending limit doesn’t mean unlimited spending," said Jolene Price, an American Express Canada spokeswoman.
"We suggest to our charge card members that they contact us if they are planning to spend significantly out of pattern.
"In Mrs. V.’s case, her spending patterns changed, and as a responsible lender, American Express followed up to ensure that she could support the increased level of spending."
After more discussion with her lender, AV. told me she will cancel the card and get a partial refund of her annual fees.
Finally, S.H. has a Capital One credit card with an interest rate of prime plus 0.9 per cent. He told me that the rate is going up sixfold.
Capital One will be ending its low prime plus 0.9 per cent rate because of the higher cost of doing business in Canada, spokeswoman Laurel Ostfield said.
"We are switching some of our customers to our best available product (5.99 per cent annual percentage rate, fixed for three years), which is very competitive in the marketplace."
This week, Capital One started notifying customers that the new rate will show up on their October statements.
By Sept. 4, cardholders will have to decide whether to accept the new rate or reject it.
If they reject it, they will have to stop charging new purchases to their cards.
But they can pay off their current balances under the existing terms for as long as they like – as long as they make their minimum payments – until their balances reach zero.
"Then their account will be closed automatically," Ostfield said.
eroseman@thestar.ca