Steering Clear of Credit Card Bad Behaviors


Credit card companies don’t want you to know this, but they’re not above taking a peek at what you’ve purchased on your credit card and evaluating such purchases as potential signs that you’re in economic distress.

Imagine that. Credit card companies spying on their customers?

But, yes, they do. The New York Times (Stock Symbol: NYT) reports that a 2002 study on customers of Canadian Tire (Stock Symbol: CTR.NV) revealed that 2,200 cardholders who used their plastic to purchase booze missed four payments on their credit card bill during the ensuing year. But only 550 cardholders who used their plastic to pay for dental appointments missed four card payments during the next year.

The conclusion? Booze is bad for business. Bicuspids? Not so much.

So card companies are taking some aggressive steps to make sure their customers are able to meet their financial obligations. No wonder, given a credit card environment which, according to The Times, is expected to lose $395 billion during the next five years.

What card issuers want are customers who pay their bills. And one of the best ways to figure that out is to sneak a peek at cardholders' spending patterns, the better to see if they’re a good credit risk or not. If they deem you as a potential drunken spendthrift, then card companies are more likely to kick you to the curb. That’s not hyperbole, either. According to the banking analyst firm Meredith Whitney, credit card companies will cut credit lines amounting to $2.7 trillion by the end of 2010.

So how do you avoid the card companies’ prying eyes – and keep your card record squeaky clean?

Don’t put that $150 spending spree at Wal-Mart: (Stock Symbol: WMT) on your credit card. Believe it or not, credit card companies view big purchases at “low end” retailers as a red flag. Other negative attention-getters are card purchases at bars and taverns. Like the Canadian Tire customers, cardholders who make a habit of putting pint after pint of beer on their plastic may prove to be big credit risks down the road. At least, that’s how card companies may see it.

Other behaviors to stay away from are using your card to pay for things like marriage counseling (divorce often leads to financial troubles, which leads to missed card payments), strip clubs (card companies may think you’re going to the go-go clubs to escape your financial anxieties) and traffic tickets (it may be a sign of reckless behavior).

It’s disconcerting at best, and downright creepy at worst, to think that your card company may be spying on you. But with $395 billion in card asset losses staring back at them on their balance sheets, card carriers will do anything to make sure you pay your bills.


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