Archive for June, 2008

I have an American Express One card that I used to love. The two main reasons are:

• 1% of what I spend goes into a high-yield savings account
• No credit limit

It’s widely known that we’re in a credit crunch, and my old friend is not spared from the crunching.

• The high-yield savings account, which at its peak was 5.25%, is now only 2.75%.
• My credit limit has gone from none to…some.

My once stellar (to me, anyway) savings account is now terrestrial. My once unlimited resource (Vegas, anyone?) is now tethered.

An article in the Washington Post mentions how a sudden credit limit drop can affect your credit score. Using their example: If you start with a limit of $10,000 and revolve $4000, you’re utilizing 40% of credit available. However if the issuer lowers your credit to $5000, your suddenly utilizing 80%. So when your credit score is calculated, you look as if you’re nearing your maximum. And that counts against you.

The Good

I was told (by American Express themselves) that having a card with no limit can damage my credit report. It seems that when calculating the score, if the scorer encounters a card with no limit, it considers the balance as the maximum available. Say I have a $3000 balance on a no-limit card. The credit-scorer wants to figure out my debt-to-available-credit ratio, but it can’t—there is no pre-determined limit. So it uses my balance, $3000, as the credit limit. This makes it looks like I’m maxed out on that card, but in reality I can’t max out.

So, with my newly established credit limit, I no longer look maxed out.

The Bad

By establishing a credit limit, Amex has formed an opinion about me: This guy can go off the handle at any moment. It’s an exaggeration, but it still hurts. I thought Amex and I had something.

The Ugly

But others with the One card have had it worse. One One card holder had his balance reduced to $5000, but he was revolving $6000. Then Amex requested he immediately pay it off in full.

My friend the One card has gone from telling me it’s OK to push my limits to being the voice of reason. Instead of, “You need a new laptop”, I’m hearing “You don’t really need that DVD.” That’s a good thing…after all, Vegas is almost paid for.

Today, I filled up at the same station with a different credit card. There was no $60 limit. So maybe it was the combination of that particular gas station and my bank. This will go unsolved for now.

Along the same lines, a gas station owner in West Virginia has ceased taking most credit cards. The credit card surcharges are costing his business $1 for every $50 that is spent. It seems this would mean fewer customers, and fewer customers mean less business. So do gas stations make so little off of gas, that this is a reasonable option? Apparently so. They make most of their profits off of what is sold in-store.

When getting gas, I always use my bank card at the pump. Over the past few weeks, I’ve gradually accepted the rising prices as a cost for loving my gas-devouring beast. However something new happened the other day—the pump stopped at $60 flat. My tank wasn’t full, and I wasn’t able to milk anymore gas from that transaction. I decided to look into it.

Who did it

There are three suspects for why the pump stopped when it did.

Me. This could be my fault if my account was empty. But it wasn’t (at that moment, anyway), so I ruled this out.

Wells Fargo. In the almost 10 years I’ve used Wells Fargo, this has never happened. What’s more, the week prior I paid over $65 at another station.

The station. This was my first time at this station, so I have no experience to compare. Therefore, rightly or wrongly, it’s getting the blame.

Before these charges can stick, I need more evidence. So I turn to a very accurate and trusted resource: The internet.

I immediately stumbled onto City-Data.com, a site that collects and analyzes data about US cities. Oddly, the forum posting that was the most useful mainly discussed gas in the UK. But hidden in the petrol talk was the snippet that solves it all:

The gas station owners have to find a middle ground between how much people usually get and how much they can put a hold on those funds in the account. When you swipe your [debit] card neither the station or your bank knows how much you are going to spend, so they put a “hold” on a set amount of funds in your account. If they set it too high, and there isn’t enough to cover it, the card will be denied and the pump will not authorize and turn on. Most lately have been set at $50 or $75. Generally enough for average sized tanks and not too big of an amount that the [debit] card will not work.

Thanks Bydand.

At peace

Credit cards don’t have this issue. Also, depending on the program, many credit cards feature rewards or cash back programs for filling up. I use a Discover Open Road credit card that offers cash back on gas and maintenance on my ever-hospitalize Jeep. This, or other gas cards,can help the hurt.

But as traumatizing as my weekly 17 gallons are, at least I don’t have the 26 gallon Escalade, the 32 gallon H2 Hummer, or the (gulp) 40 gallon Suburban.