Bluebird, REDbird, gift cards, Walmart Money Center. These are all terms you’re very familiar with if you engage in “manufactured spending”, where you create spending that costs little to nothing but earns you lots of points/miles from a credit card. It’s a typical strategy for maximizing the generous sign-up bonuses many card companies are offering now.
One of my readers (Anton) relates the following story to me about a problem they encountered. I’ve paraphrased where necessary:
Anton has a great credit score (FICO over 800). Anton doesn’t carry balances on any credit card. He has more than one card with US Bank, including a Club Carlson personal credit card (rarely used) and a FlexPerks card.
Anton applied for, and received the Club Carlson Business Rewards Visa. He made a couple of small charges on the card and then bought $2500 in gift cards to meet the requirements of the sign-up bonus for the card. The charge was initially declined and then approved after he called US Bank.
A few days later, he tried to login to his US Bank account online and found he couldn’t. He called customer service and was given a different phone number to call.
Upon reaching an agent at the second phone number, he was told that the recent gift card transaction raised a flag on his account. The bank had decided that he had too many recent inquiries and new cards open, and was closing all his accounts due to a higher than acceptable risk level for him as a customer.
The agent he spoke with voided all of his points (almost 100,000).
After another call to US Bank to appeal the decision, he was able to get an agent to convert his accounts into a status where he could redeem points but all of his accounts remain closed.
This is one of the risks when you apply for multiple cards and manufacture spending. Frankly, this is a risk that’s always present when you have a credit card, the bank retains control. But, when you do things the banks don’t like, they can close your accounts.
I don’t hear of a ton of instances where this happens, but it’s out there.
I do believe the bank has a right to void your account for any number of reasons. The tougher question is whether they have the right to take back points you’ve already earned for transactions they approved.
If US Bank approves the transaction that awards Anton the points, should he be entitled to spend them if they change the status of his account later based on that transaction they already approved?
Don’t miss any of the daily travel tips, tricks and strategies found here. Follow me using one of these options: