From: ciar04@vaxa.strath.ac.uk
Newsgroups: soc.culture.asean
Subject: Re: Social Development Unit (Re : was Sins of Singapore)
Date: 26 Jul 92 17:02:49 GMT
Organization: Strathclyde University VAX Cluster

In article <920724191719.2080a6a0@VAX1.UTULSA.EDU>, SSR48327@VAX1.UTULSA.EDU (Syed Shibli) writes:

>   Operationally that is the spending patterns and past payment records of
>   each cardholder. This is not a credit limit, however. I call it security.
>   A record of the cardmember's past spending patterns gives them a good
>   feel of what the cardholder might or might not spend money on. The issue
>   between charge and credit cards is that credit cards make it easier for
>   one to be far behind on payments. Sure, you pay less in annual fees, but
>   credit card issuers "make up" for that by charging exorbitant interest
>   rates. I think the overhead evens out, eventually. American Express charges
>   more annual fees but you would have to pay all your bills in full. Credit
>   cards emulate this to some extent: they have what you call the "grace"
>   period, that time of the month when you say grace and hope you'd have 
>   enough money to pay the next bill.

The point I am trying to make about the so called "no credit limit" claim by
AMEX is that this is sort of a misrepresentation on their part.  Off course
I am not talking about the justification of this "internal" credit limit;
mind you, I think ALL credit cards/charge cards should have some sort of
credit limit to minimise possible credit card fraud.

In addition to the spending patterns of the cardholder (which is absolutely
essential when renewing/considering increase in credit limit), banks should
also keep track of the merchant's activity.  A couple years ago, I was
investigating the case where a merchant (a boutique shop) was consistently
accepting transactions of over S$10,000 for single purchases.  After a
couple of spot checks and background investigating, we found that the
merchant was part of a syndicate that was defrauding credit card companies.

Regarding the interest levied on unpaid charges, the amount charged by
American Express and Visa is almost identical (usually 2% per month, 
calculated on a daily basis, with effect from the date the transaction
appear on your statement and not the date of the statement).  American
Express (and Diners Club) require you to pay the full amount on your
statement, while Visa requires you to pay between 5% (I think Citibank Visa)
to 10% (most banks), minimum usually either $5 to $10.  Both Amex
and Visa will record your delinquency cycle (how long the period of
non-payment). 

Regards.

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