People like to think that only on the Internet does one need to worry about companies watching everything you do and using that information in some way against you. Well I hate to be the one to break the bad news to you but this isn’t the case as credit cards companies have more data on you than anything found on the web. They can track your purchases, types of things being purchased, when you made the purchases and where you made them all within seconds of you buying something.
Most people don’t get overly concerned about this type of data collection when it comes to credit cards, debit cards, air miles cards or store cards. The problem is that during times of financial hardship that data is possibly being used to make decisions about your credit card worthiness. The idea behind this kind of profiling is that when you buy used clothing at thrift stores or do your shopping at those club superstores the credit card companies see this as a possible indicator of financial distress. Distress that could lead to missed payments or defaults.
These indicators are used by the credit card companies to decide whether to decrease your your credit limit as well as whether to increase your interest rates. American Express has already admitted to doing this kind of profiling but says that it has stopped the practice. This kind of thing has led to a new credit card reform law that has a provision requiring federal regulators to investigate if credit card companies are using the collected data in this type of profiling, leading to increased rates or decreased limits.
Stephens says the database’s purchasing information can provide a pretty clear picture of credit card users. “What do they know about you? Depending on how extensively you use your credit card, they conceivably have a very clear, distinct picture of an individual. It’s not only your retail purchases, but your online purchases. It can really paint a very complete picture. The stores that you shop at can paint a picture. You also may use it at a doctor’s office if you pay for care with a credit card. Some people pay for their utilities with credit cards.”
Source: Connie Prater – WalletPop :: What You Buy Affects Your Credit
As they say in the post – cash is really the only privacy protector when it comes to your buying or bill paying habits.