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Thread: Banks, Credit and Denials

  1. #1
    Curmudgeon OtakuLoki's avatar
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    Default Banks, Credit and Denials

    I saw this story this morning, about how Gander Mountain is suing its partner in providing a branded store credit card. The reason for the lawsuit? The bank involved has been denying what most people would consider the 'best' credit card customers: If you have too high a credit rating, and always pay off your balances, this company feels they'll be losing money on you.

    Now, ISTM that this will be likely a slam-dunk suit for Gander Mountain: They contracted for a store credit card to make it easier for people to buy their products. The fact that the company they've contracted with is being paid on time is not going to be something Gander Mountain would consider to be a problem. I don't know what, exactly, the arrangements for such an agreement might be, but I suspect that the issuing bank would have some clauses put in to share risk with the retailer for bad debts. I doubt there's any kind of guarantee for generating enough late fees.

    I think it's telling that a bank is alleged to have out and out admitted that junk charges are the major focus of their business. I tend to be disturbed by the way that people seem willing to excuse predatory banking or lending practices, esp. if they feel that the victims of such scams are undesirables. OTOH, I will admit that so long as the bank involved explained its fee structure clearly on the application, I'd have no problem with a bank using the criteria mentioned for choosing whom they will issue credit to. Provided they're not also contracted to provide banking services for a third party's customers. I would hope I wouldn't feel the need to do business with such a company, but I admit I have a certain latitude that many people don't when talking about credit.

    It just seems to be another bank giving up camoflauge, and raising the skull and crossbones. Arrrr!

  2. #2
    Free Exy Cluricaun's avatar
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    That's interesting. It's not just junk charges though, often times when you check out at the store they'll offer you an incentive if you apply for the store card. The old "Would you like to save 10% on your purchase today?" schtick. Thing is, Gander Mountain isn't lowering the price by 10%, they get all the money they wanted in the first place, the credit card company is the one eating the 10%. They use that as a teaser knowing that if they stick you for a 19% credit card they'll actually make that back and then some over the life of the charge. But if you just apply, get the discount, and close the card as soon as you get the bill they're eating that 10%, and since Gander sells things like guns and ATVs that can easily be a few hundred dollars on the right purchases.

    Now I'm not exactly crying for the credit card company, they don't have to offer jack shit to entice anyone, but they obviously feel that they'll hook more suckers with the tease and they're mad that people who shop at Gander aren't getting suckered.

    I shop at Gander pretty often myself, and the clientele tends to be middle aged or older men, not a group known for making stupid credit moves.......especially when they have enough disposable income to be playing at the often very expensive outdoors sports. What they should have done is fine printed that application so that you only get the 10% if you carry a balance over X amount of billing cycles otherwise they charge you back for it, but apparently they didn't so fuck 'em for being beaten at their own game.
    Hell, if I didn't do things just because they made me feel a bit ridiculous, I wouldn't have much of a social life. - Santo Rugger.

  3. #3
    Free Exy Cluricaun's avatar
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    Also opening and closing lots of accounts quickly is something that does report on your credit history. They can see who you applied with, when it was opened and when it was closed and doing that too often will work as "derogitory" information on your credit history. It might not lower your score exactly, but it will make others who offer credit not want to work with you because they only lose money on short term customers. It costs money to open accounts and send statements beyond just eating that teaser too.

    I totally understand why Gander is pissed, but as someone who works with finance I understand why their credit directives would tend towards declining someone with that type of frequent activity. A good credit score isn't the only thing you need to get credit, despite what someone might think. A stable credit history of making payments on time as agreed over time is much more attractive.
    Hell, if I didn't do things just because they made me feel a bit ridiculous, I wouldn't have much of a social life. - Santo Rugger.

  4. #4
    Free Exy Cluricaun's avatar
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    Also opening and closing lots of accounts quickly is something that does report on your credit history. They can see who you applied with, when it was opened and when it was closed and doing that too often will work as "derogitory" information on your credit history. It might not lower your score exactly, but it will make others who offer credit not want to work with you because they only lose money on short term customers. It costs money to open accounts and send statements beyond just eating that teaser too.

    I totally understand why Gander is pissed, but as someone who works with finance I understand why their credit directives would tend towards declining someone with that type of frequent activity. A good credit score isn't the only thing you need to get credit, despite what someone might think. A stable credit history of making payments on time as agreed over time is much more attractive.
    Hell, if I didn't do things just because they made me feel a bit ridiculous, I wouldn't have much of a social life. - Santo Rugger.

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