Don’t Feed the Alligators

A Personal Finance Blog from a Small-Scale Landlord’s Perspective

Creative Commons License photo figure credit: Kecko

Over the last several weeks we’ve put a lot of mileage on our rewards credit card. We’ve been stocking up on gift cards from our local grocery store due to the fabulous deal that they offered during tax season.  The use of our rewards card here sweetened the deal even more, since we get 5% cash back on grocery purchases, and the purchase of gift cards counts as groceries.  Unfortunately, the credit limit on this card was not high enough for us to be able to put all of the cards that we wanted to buy on it in one cycle, so I made two mid-month payments to ensure that we could receive all of the rewards we had coming.

Because of a too strange to explain here situation, we actually charged $3,000 online and decided to cancel the order before it shipped.  The merchant was great about the order cancellation, and we had no problem with this.  I noticed on the credit card website, however, that our available balance went down significantly.  I know how credit card transactions work, so I assumed that our card was authorized for the big purchase, which reserves the money on our card for some period of time, but the charge was never completed.

A few days went by and our balance was down to less than $100.  My experience was that authorizations only last for a couple of days at best.  I waited another two days, but there was no change in the available balance.  I sent an email to the credit card company’s customer service department inquiring about why the available balance was so low.  Here is the response that I got:

“Upon review of your account, the reason you are showing only $79.00 in available line of credit because you utilized your entire line of credit during this billing period in the amount of $XXXX.xx. According to the terms of [credit card company] Revolving Card accounts, you may utilize your entire assigned Line of Credit one time within a billing period. Even though you are making payments within the billing period, your available line of credit will not be reset until the next statement closing date on 04/30/09.”

So basically the credit card company was saying that the credit limit applies not to my balance but rather to how much I charge in total in a cycle.  I thought this response was strange for a number of reasons.  The first of which was that I had never heard of such a thing.  The second was that the amount I had charged was already greater than 125% of my credit limit.  I didn’t happen to have the terms of my account handy, so I took the company at its word and chalked this up as a way for the company to limit the amount of rewards they have to pay out each month.

Imagine my surprise when a day later our available balance suddenly increased by exactly $3,000.  It seems to me that there are only two explanations for this: the first is that the credit card company took pity on our plight and gave us a break on the terms, in the amount EXACTLY equal to the purchase that we made and then cancelled.  The second is that the authorization for the purchase finally rolled off the books.  I’m going to assume it was the second, but I haven’t contacted the card issuer to confirm.

What intrigues me the most about the whole situation is why the credit card issuer answered the way it did.  Either the terms cited are true but not observed, or they are not true and the customer service representative flat out lied.  If the latter is true, why?  Was it so hard to actually look at our account and see that there was an outstanding authorization that was limiting out credit line?  I’m just baffled by the response on this one, and if the rewards program wasn’t so darned good I might consider at least calling them on this or even finding a new card to use.  As it is, there’s been no harm, so no foul either.

Have you ever had a bank or credit card company do something bizarre like this?

6 Responses to “Bizarre Credit Card Company Explanations”

  1. Michelle Says:

    I find this totally bizzare, too. It seems a lot of the time people/companies just make things up as they go along.

    I do not have an instance of anything that has happened like this with credit cards, (I don’t have any,) but I did have a strange situation happen recently that really threw me for a loop.

    I placed an order through email with a retail company, (not a very large one, but not a one-man operation.) I waited for the order and for the money to be taken out of my account. After a while, I sent the company an email about my order and they said that they were waiting on some items that were backordered and would Like to wait on them. I declined, the money was taken from my account and I waited on the order. After about a week I contacted the company again to say that I had not received my order. I was told the order had been shipped. I waited a few more days and still did not receive the order.

    Upon contacting the company again they sent me the copy of the shipping statement through FedEx. The address listed on the statement was my former mailing address. We moved about 10 months before the order was placed. When I explained the error to the company I was told that they were sorry, but there was nothing they could do.


    I was appalled at the response. When I questioned it I was told that they had fulfilled their end of the transaction, taking, filling, packaging and shipping the order, (oh, and also taking my money,) and that was it. I responded with my frustration and disappointment. The company told me that I should call the house where I used to live and see if they had it. I don’t even know who lives there.

    To make a long story short, after a lot of back and forth I was told that they would check with FedEx and see if there was anything they could do about it, and that I would hear back in about 10 days. Within 3 days a replacement package was delivered to me.

    Just bizzare.

  2. Chris Says:

    Michelle - even if you had met the folks who now lived there, how would you know their phone number?

    I had an odd offer from CitiCard today that I just shredded. I can only assume that they’re trying to rein in their outstanding credit. The deal was that for the next 4 months, they would match 20% of the amount *over* my minimum payment that I made, up to $550. And that that extra would be applied to my account over the course of the *following* three months (so it seems like a 7 month program).
    However - in addition, I would be agreeing to *reduce my own credit line* by the amount over the minimum that I paid. So if I paid the maximum possible in this program over my minimum payment, which apparently is $2750, given that they’ll only match to $550, then I would also be agreeing to reduce my credit limit on that card by $2750.
    By the way - you also agree to a temporary suspension on the card during these (7 ?) months.
    Now, aside from paying down my debt, I’m not too sure how much this really helps ME. I would be a little less in debt, but my debt to overall credit ratio would suffer, and presumably, if one’s card is close to maxed out when beginning this program, one would end up with one’s card pretty close to maxed out again, since the minimum payment wouldn’t really be reducing your debt by much.

  3. MITBeta Says:

    Michelle: We ordered wine with custom labels for our wedding. It never arrived. ScrapperMom called the company two days after the wedding. “Oh,” the woman on the other end of the phone said, “we’re not allowed to ship wine to Massachusetts.” That’s fine, but couldn’t you have called to let us know?

    Chris: Seems like what you’ve got there is an exchange of free money for a short term ding in your credit rating. That’s a risk I’d be willing to take.

  4. Rachel Says:

    Either the terms cited are true but not observed, or they are not true and the customer service representative flat out lied.

    Or the rep was just flat-out wrong, thereby not lying AND not telling the truth. It does happen.

  5. MITBeta Says:

    Rachel: You make a good point. I had not considered this.

  6. Burl Sibbald Says:

    special post , really good view on the subject and very well written, this certainly has put a spin on my day, numerous thanks from the USA and keep up the good work