What Kind of Information is Your Credit Card Collecting on You? – Frugal Confessions

What Kind of Information is Your Credit Card Collecting on You?

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Paul hates mail. He gripes about the inefficiency of the postal system, the junk mail seeping into our home, and even the physical opening of the envelopes themselves. But I love mail! How could I not love something that shows up on my doorstep full of wonderful deals and cheap internet finds? In fact just the other day I opened up one of these shiny, promising envelopes, and was pleasantly surprised. The first coupon was for 25% off of a purchase at Ann Taylor, one of my favorite stores. The next coupon was for 20% off an entire purchase at the Container Store, a place that my Type-A personality can only describe as heaven. Double score. I looked further, and was baffled when I saw that the next coupon was for 15% off at World Market, a store I shop at for their excellent deals on extra virgin olive oil (evoo as Rachel Ray would say). My eyes darted suspiciously to the next, and then the next, until I finally steadied my gaze on the MasterCard logo on the letter. Could it be that my credit card was gathering my shopping information and offering me deals based off of this information? Suddenly a flyer that seemed so filled with promise was little more than a dehydrated mosquito ready to suck the life, or money, out of me.

I ask certain things of my credit card company: I want rewards, I want free items, and I want the credit for a 21 day period until I pay it all back. I don’t ask the company to gather my information, analyze my purchases, dig into my head and anticipate my future needs. I do not want products specifically tailored to what others think I may want to buy. True, any relationship must be two-way— especially when one of us is making out like a bandit (myself)—but hey, I am the spoiled consumer, so what did you expect?

Spending Behavior Analyzed

Credit card companies are profiling their users. They are looking for ways to predict future financial catastrophes, such as people who are about to declare bankruptcy, or who intend to rack up lots of debt and not pay it off. It’s a lot like insider trading—they want to diminish their risk by getting *possibly* illegal information. In fact, it’s so rampant that federal regulators are currently investigating the practice as a result of the new credit card reform passed into law in May 2009 (see below for more information). Some of the signals that they flag are marriage counseling charges, secondhand clothing stores, pawnshops, etc.  Are you spending large amounts of money at bars? Maybe you are a drunk. Hanging out at casinos? It’s possible you have picked up a nasty gambling habit. They even might assume that if a person shops at the dollar store or thrift store that their finances must be going under. I would think that perhaps their frugal conscious has just kicked in, and they have had a financial epiphany of sorts.  

The result can be a sudden increase in your interest rate, or a decrease in your credit limit. Have you gotten one of these before?

Oh Dear…What are my Purchases Saying About Me?

After researching for this article, I began to think about how one might categorize me based on my purchases only, of course. I guess in a good way, as during the recession I was given two credit limit increases that I did not ask for. Were the credit card people scratching their heads at a 20-something year old’s purchases from the knitting store, or boring but consistent pattern of purchases for gas, groceries, and CVS (they must have figured that they were safe when after analyzing my account my spending categories mirrored those of a 70 year old woman). Oh come on—purchases from the Container Store doesn’t scream risqué?

What would your credit card statements say about you?

For more articles on credit cards, check these out:

New Credit Card Laws to Protect Consumers

Who Uses Your Credit Score, and How to Get a Credit Score Without a Credit Card

Little Used Benefit of Being a Cardholder

What you buy, where you shop may affect your credit

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