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Pastimes : Clown-Free Zone... sorry, no clowns allowed
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To: stan_hughes who wrote (371689)7/22/2008 1:58:19 PM
From: Elroy Jetson  Read Replies (2) of 436258
 
I believe limited bank capital is the reason for the recent wave of banks like Chase and Bank of America "upgrading" their Visa accounts to "Visa Signature" accounts.

I am fairly certain this change reduces the amount of the bank's capital that is needed to facilitate your Visa account to the amount actually borrowed on each account.

I opted-out of this alleged upgrade and I suspect the primary benefit of this upgrade is for the bank.

The difference being Visa accounts come with an authorized "Credit Limit" while Visa Signature accounts have a "non-reporting credit line".

At the bank's option, they may allow you to exceed your "non-reporting credit line" without an over-limit fee but the full amount of the balance exceeding the "non-reporting credit line" is due in full on the next statement. As I'm not interested in buying a Rolls Royce with my Visa card, this feature holds little interest.

This change lowers the Credit Score of those using Visa accounts without carrying a credit balance by effectively increasing credit utilization, as your maximum credit used now becomes your credit limit increasing your credit utilization. Capital One pioneered this reporting technique to lower their customer's credit score to make them less attractive to other lenders.
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