December 24th, 2008, 01:35 PM
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#9 (permalink)
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| Real gangstas sip on Yacc
Join Date: Oct 2001 Location: Suckas-ville
Posts: 4,552
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I have heard of CC company's closing accounts that aren't in use before, ie. no balance for a period of time. Merchants pay a fee every time a CC is processed, not much $0.25 or so. The CC companies make money off of the merchant fees every time you use a card, so if you don't use the card at all they make no money. Sad, but that appears to be the reason.
| They make substantially more off of interest payments on carried balances and late fees than the small percentage (usually 2-3% of purchase price) they will take as merchant fees.
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If I use that same card as a credit card (VISA) there is no charge, why?. Because the merchant pays the fee in that situation.
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The issuing companies got wise to this. Nowadays the merchant fees on Credit vs Debit transactions are nearly identical. And get a bank that doesn't charge a debit fee...
With that all being said, why should they not cancel the card? If you have not used it in six months you are bringing them *zero* income as a result of you being their customer. Not only that you really have no prospects of bringing them income as either:
1) You are using other cards
2) You are responsible enough with your money to not need to use it
In either of these scenarios the CC company really doesn't want you as a customer. They do have administrative costs and your credit limit is a liability that they have to insure against both of which cost them money. When you are bringing in nothing to them, it makes sense from a business standpoint to cut you loose.
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