NEW YORK -- Shannon Burdette tried to pay with her Shell MasterCard after filling up her fuel tank, but found the card rejected. Confused, she called the customer service line on the back of the card, issued by Citibank, and was told the account was closed because of something that appeared on her credit report. But when the Sykesville, Md., resident got a copy of her credit report online, the only negative thing she saw was "closed at credit grantor's request" on the Shell MasterCard account.
"They said there was a routine review," Burdette, who maintained that she and [image-nocss] her husband, Brian, used the card regularly and always paid the bill on time, told the Associated Press.
Burdette is not alone, said the report. People across the country have been reporting similar experiences in postings on various consumer websites, it said.
Citi confirmed the basics, the report said. The bank said in a statement obtained by the news agency that it "decided to close a limited number of oil partner co-branded MasterCard accounts."
That included not only Shell, but CITGO, ExxonMobil and Phillips 66-Conoco cards, said the report. The close date was Wednesday, and letters were sent out Monday to customers informing them of the change, a Citi spokesperson told AP.
The bank would not say how many cards were shut down or how much available credit they represented, the report added.
But unlike the bank's move to shut down its Home Depot cards, Citi did not discontinue the sale of these cards altogether. It is still accepting applications, promising rewards like 3% cash back on fuel purchases and 1% cash back on other spending, said AP.
No law, including the Credit CARD Act that has started to take effect, prevents banks from closing down credit accounts without warning. Credit card issuers all maintain the right, typically listed in the fine print on credit-card agreements.
Citi would not say why the cards in question were shut down, issuing a statement that said only it continuously evaluates its products.
"It is kind of an extraordinary action, but these are extraordinary times," Ben Woolsey, director of marketing and consumer research for CreditCards.com, told AP. He noted that Citi is not the healthiest bank. In fact, Citi posted $8 billion in consumer credit losses for its third quarter last week, including both mortgages and credit cards. Like many banks with big consumer lending portfolios, Citi is expecting defaults on credit cards to rise in coming months. Credit-card delinquencies typically track the unemployment rate, which is at 9.8% and is expected to top 10% soon.
Analysts noted following the earnings report that Citi has sharply reduced its outstanding credit to consumers.
A card being closed may, but does not always, damage a person's credit score, said the report. Such scores, which lenders use to determine if a person is a good credit risk, take into account a series of factors, including how long the person has had credit accounts, the person's payment history and the balance versus available credit.
It could be that last factor that hurts consumers most, said John Ulzheimer, president of educational services for Credit.com. If a consumer had a high credit limit on the closed account, and that credit is no longer available, it could alter the "utilization ratio" for the person's remaining credit. If another type of credit carries a high balance, the loss of the credit line could push down their score.
Ulzheimer said banks have been routinely making such moves in the past year and a half, mostly on a case-by-case basis. "Every once in a while you'll get a huge pop in one particular card product," he said.
Card holders who think their cards were unfairly shut down can try to contact the bank and ask for reinstatement, but Ulzheimer did not hold out much hope for success. "In this environment," he said, "it's not as successful as it was in the heyday of credit cards, where you could in fact call and plead your case."
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