Will banks close your card if you only use bonus categories?

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tschmelcher
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Will banks close your card if you only use bonus categories?

Postby tschmelcher » Sun Nov 17, 2013 12:38 am

I recently got Barclaycard Arrival (with AF) and am now using it for all my "other purchases" spending, but I'm keeping my other cards for their bonus categories--specifically AMEX Blue Preferred for 6% on US supermarkets, Bank of America Cash Rewards for gas, and Chase/Amazon Rewards Visa for 3% at Amazon. I'm also considering getting US Bank Cash+ for 5% at restaurants.

So those other banks will now be losing a conspicuous amount of money on my credit card accounts (I always pay in full, so they don't get any interest). Is it possible that they might forcibly close my accounts when they notice that I'm only spending in the bonus categories? Can they even do that?


ilikeme1
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Postby ilikeme1 » Sun Nov 17, 2013 5:18 pm

I have never heard of any bank or issuer doing that.
Wallet:
AMEX BCP: 9K (2012) (every day expenses, gas, groceries, department stores)
AMEX Zync: NPSL (2011) (large expenses)
AMEX Costco: 4k (2013) (Costco, gas, and restaurants)
Discover IT: 5K (2010)
PenFed Plat Rewards Visa: 3K (2012) (Gas, Target)
USAA Plat MC: 7K (2010) (everyday expenses, places that do not take Amex or Discover)
US Bank Cash+: 7K (2012)
Target REDCard 3k (2013)

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otter
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Postby otter » Sun Nov 17, 2013 8:30 pm

I think most banks expect a substantial amount of their customers to use their card only in the "sweet spot". That's part of the risk of issuing credit cards, but it's not as much of a risk as you may think. Even if you pay in full every month, they still make money off of the merchant fees.

For example, let's say every Discover IT customer used their cards only for the 5% category that quarter and they all paid their balance in full every month. Discover would still probably break even. Of course, that's not going to happen- a substantial amount of their customers will not pay in full and pay interest and/or will use it for every purchase, so the future of Discover is not in danger.

tschmelcher wrote: Can they even do that?

If your credit card company sends you a letter which says they are closing your account because they don't like you, you smell, and your mother dresses you funny- they probably aren't breaking the law in most states. They're all careful to give themselves an out in the cardholders agreement stating they can cancel your account at any time for any reason (they can't of course close you for any discriminatory reason such as race, gender, religion, etc though). Of course, they are in business and they approved you in the first place, so they typically don't disapprove you unless they have good reason such as: you file bankruptcy, become delinquent on other accounts or apply for a bunch of accounts after they approve you (Barclaycard has a reputation for closing peoples' accounts in the first six months because they apply for too much credit).

Would any credit card issuer ever close the accounts of those who only use the bonus categories? Not likely, but I could see this scenario: new management takes over the credit card division of a company(or the entire division gets sold to a different company). The new management doesn't like the margin they're getting on cards so they decide to get rid of those who are the lower margin customers(those who use it only for the bonus categories and pay in full). That's not likely, though- even with that scenario, they would probably more likely weaken the bonus somehow or make it harder to redeem.
In my Wallet:
  • Amex PRG NPSL[3-14, bd 91]
  • Sallie Mae MC $8000[1-14]
  • Chase Freedom $4700[1-14]
  • Discover It $2750[8-13]
  • BoA UCF Alumni Cash Rewards $5000 [3-15]
Sometimes in my Wallet:
  • GM BuyPower WEMC $5000[9-14]
  • Wells Fargo Propel 365 Amex $7000[4-14]
  • Barclaycard Arrival WEMC $7000[3-14]
  • BoA Better Balance $3000[2-15]
In my sockdrawer: Amex BCE $1000[10-13, bd 91], OCCU Duck $10000 [11-13], The Sportsman's Guide Visa $8000[8-14], Chase Slate $4000 [9-14]Delta Gold Amex $2000 [2-15 bd 91], Diners Club MC $20000 [10-14] Commerce Bank Visa $2000 [3-15] Citi Double Cash $1000 [3-15]
Total CL: $90450

MemberSince99
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Postby MemberSince99 » Sun Nov 17, 2013 9:34 pm

I agree with the two above posts - if they had a problem with that, they shouldn't offer those categories to begin with. They need to expect that in the "worst case" (for them) and hope you use it for other things. But to close you for it, I've never heard of that.

Now IF you do something like use Vanilla Reloads to stock up on their 5% categories and use manufactured spend to crank it up, THAT I have heard of them closing people down for. But normal use? No.

So just use your cards for your normal spending whatever offers the best rewards for that category and don't lose sleep over it.

RewardHop
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Postby RewardHop » Mon Nov 18, 2013 12:06 am

tschmelcher wrote:I recently got Barclaycard Arrival (with AF) and am now using it for all my "other purchases" spending, but I'm keeping my other cards for their bonus categories--specifically AMEX Blue Preferred for 6% on US supermarkets, Bank of America Cash Rewards for gas, and Chase/Amazon Rewards Visa for 3% at Amazon. I'm also considering getting US Bank Cash+ for 5% at restaurants.

So those other banks will now be losing a conspicuous amount of money on my credit card accounts (I always pay in full, so they don't get any interest). Is it possible that they might forcibly close my accounts when they notice that I'm only spending in the bonus categories? Can they even do that?


I do similar things. I've never spent a cent on my Amex BCE thats not grocery for example.
They issuers don't really care. BCE/BCP both have yearly caps for example, so they limit their losses anyways. Cash+ also caps quarterly.

ps. you can do better than 3% at Amazon
[size=60]
Amex BCE: 3% grocery, 2% gas
Bank of America Better Balance Rewards MC: $25/quarter bonus
Barclaycard Rewards Visa Signature: 2% gas, groceries, utilities
Capital One Quicksilver Visa Signature: 1.5% everything
Chase Freedom Visa Signature: 5% rotating
Citi Forward Visa: 5% restaurants/fastfood, movie theaters, amazon.com
Discover It: 5% rotating
SallieMae MC: 5% Groceries, Gas, Amazon
US Bank Cash+ Visa Signature: 5% electronic stores, restaurants
Sock Drawered: Chase Sapphire, Chase Amazon[/size]

takeshi
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Postby takeshi » Mon Nov 18, 2013 7:46 am

Not in my experience. I have several cards that are only used for specific category spend. As stated above, manufactured spend can cause red flags.



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