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Q: My wife and I have an American Express account and the company recently reduced my credit limit because I did not use enough. I went for two or three months with minimal use; In general, I only charge a few hundred dollars a month and I pay it immediately.
But American Express has just reduced my huge credit limit because I did not use enough. My credit score is over 800 and has been for years. So I do not pay much attention to credit, etc.
My question is: why would American Express go to the trouble of doing that? What do they earn from reducing my credit limit? Ironically, when I received their letter, I had just made a big single charge (a wedding!) That had brought me close to the new credit limit. It did not seem to make them change their minds. I do not really care. The new limit is OK. Just curious.
J.R., Cleveland
A: Are you wondering why American Express will reduce your limit and what they have to gain? They can make more money by releasing the amount you have – which you do not use – and making it available to anyone else who uses it and generates revenue for American Express.
Credit card companies can not impose unlimited credit limits on everyone, although this may sometimes seem like this. It would be a risky business practice. Even if you do not use a large portion of your line of credit, they must badume that you can do it anytime, as you did to pay for a wedding.
But if you barely use your limit most of the time, they will give your available credit to other people through which they can earn money through merchant fees and possibly finance charges.
You mentioned that your credit rating was above 800. That's great. You can certainly qualify for any credit card you want. But I will not close this AmEx account unless you intend to never use it and it will be boring to check if anything is happening. Closing the account may weaken your score a little, especially if you have had one for many, many years.
Q: I have a question about your last month's article about banks that send paper checks to customers who use bill payment online. I interviewed the cashier at Huntington Bank about masked account numbers and she never heard about it. I called their main office and the representative put me on hold so that I would know my answer, and when she came back, she said that they did not offer it and did not do not know when.
L.C., Brunswick
A: As I said in the story, Huntington does NOT reveal a customer's account number when sending checks via online bill payment. Most of our local banks do not do it; some.
It turns out that you thought I was talking about regular personal checks that we write for the most part. But your question is not too far from the base! In the banking community, we have been talking about regular use of personal checks that do not contain our current account number. This could work in the same way as virtual credit card numbers that allow you to pay for things online without using your real account number.
Huntington is one of the local banks that hide a customer's account number on paper checks issued via online bill payment. Banks send their payments electronically about 80% of the time and check the remaining 20% of the time when they can not be sent electronically.
Key, Citizens and Chase also hide the customer number on online bill payment checks. PNC, Fifth Third and US Bank are among the local banks that use the customer's actual account number, as would be the case if the person sent one of his personal checks.
You can check the method used by your bank if you have already used its online payment service and if a paper check has been issued. When the check is cleared, your account number appears at the bottom or another number is the bank's internal settlement account.
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