M² Episode 144: Reasons People don't Play the Game & 10 Ways to Avoid Shutdown

Main Topics

0:38 Reasons People Don’t Play the Game?

• Inspired by this post on common reasons why people don’t travel
• Let’s pause right there: How much would your enthusiasm for the game be diminished if you weren’t particularly into travel?
• I surveyed friends on the fringe of the game/who have relatives who don’t like the game. “Top 5 answers on the board...here’s the question” (Family Feud style)
• Reason #1: Not worth the headaches and hassles of keeping track of the rules of each bank/airline/hotel
• Reason #2: Don’t want to carry more than 1 or 2 credit cards, and don’t want to participate in more than 1 or 2 airline/hotel loyalty programs
• Reason #3: Don’t want to pay annual fees because they’ll fail to catch some “gotcha” that makes the deal not as good as it sounds
• Reason #4: Just not worth it. Too much hassle, not enough return on investment.
• Reason #5: Worried about adverse action from banks/damaging credit score
• What do you think? Do these line up with the reasons you hear? Are there more “real” reasons hiding behind these?
• Which parts of this game make you want to quit sometimes?

12:10 10 Best Practices to Avoid Shutdowns

1. Avoid looking like a bust-out risk. Example: Charging $19,800 in a single transaction on a Barclays card with a $20,000 credit limit resulted in account closure.
2. Avoid exceeding or even cycling your credit limit, especially with Citi. Cycling is when your total spend in a given statement cycle is more than your credit limit. You don’t exceed your credit limit at any given time because you’ve made a mid-cycle payment. Cycling can make banks jumpy because a bounced check could lead exposure in exceed of your credit limit.
3. Consider the duration of your relationship with the bank. If it’s your first credit card with them and you’re fresh out of college it’s logical for a bank to scrutinize early transactions more than for a newly issued Amex card for someone who has had a relationship with them for 30 years.
4. Report an income your tax returns can support when applying. Amex financial reviews go much better when you can defend your stated income.
5. Avoid “anonymous payments” to credit cards. Examples of these include Western Union and Walmart Bill Pay where the funds can originate from prepaid debit cards. Find other targets for these services like a HELOC, PLOC, or checking account at a non-related bank.
6. Avoid making large deposits, especially money orders, to checking accounts from banks that issue rewards credit cards. If a bank wants to shut you down, you want to minimize collateral damage.
7. Avoid structuring, or appearing like you’re structuring. Saying you want to “stay under the $10,000 limit to avoid reporting hassles” is not a good idea.
8. Respond to fraud alerts quickly. A fraud alert is when a bank suspects *you* are the victim of fraud, not when they suspect you of reward abuse. An unresolved fraud alert can lead to more human scrutiny if left unresolved which you may want to avoid.
9. Consider the risk/reward of the opportunity. Sure, you can repeatedly send money to a spouse with payment services up to a certain limit, but if your PayPal/Google/Venmo/Facebook/etc account is shutdown how painful would that be? Also consider whether the potential of shutdown could hurt you professionally or at least make you uncomfortable/in social situations. “Dave can’t chip in for the soccer coach’s gift because he’s been banned by all the payment services we use.”
10. Mistakes happen. Patch them up quickly. For example, if you’re late on a payment to Amex or try to make a payment from an account that lacks sufficient funds: Patch it up, and call them up. They’ll usually refund fees as a one-time courtesy but don’t let this stuff go unresolved.

Happy Thanksgiving everyone!