It Doesn’t Pay to Discover

Dear Discover Card:

Really?

By the time I graduated from college, I had three credit cards. One was from MBNA (a Mastercard, I think), one was from American Express, and one was a Discover Card. MBNA and I parted ways when they started playing games with their APR. That was, oh, fifteen years ago or so, I think. As for Amex, well… I’ve changed accounts as my needs dictated, but I’ve always had an Amex card of one sort or another.

But you, Discover Card… I’ve had the exact same account number with you ever since I got my first card from you back in… wait for it… 1989.

Over twenty years ago.

While there’ve been the occasional late payments (by a few days) over those twenty years, I never actually missed a payment. Ever. I’ve managed my credit pretty well, I’d say.

Alas, with the shifting tides of the current economic climate, my wife and I have found it difficult to make our house payments of late. And so, we are falling behind in paying our mortgage even as we apply for assistance from various governmental and nongovernmental programs. But, that means our credit scores are hurting.

And now, even though I do not owe you any money, even though I haven’t had a late payment with you in *years*… NOW you cancel my card (on February 14th, no less — such a love letter I received from you with that date written upon it!)? Really?

Really?!

This, Discover Card, is the exact same scenario as what we call a “run on the bank.” Where panic amongst the account-holders — be it justified or unjustified (but, typically, unjustified) leads to many people trying to clear out their accounts all at once, which in turn causes the bank to lose its liquidity, which in turn leads to it actually being in trouble, which in turn leads to more people trying to cash out their accounts, which creates a death spiral.

Only, what you’re contributing to is a run on my household. You cancel my account with you regardless of my actual standing with you because of what you perceive to be as a threat. Your closing my account adds another negative to my credit score, making it more likely that others might cancel my accounts. If this does, in fact, lead to a credit squeeze on my household, you will actually put me into the situation where I have to change from one form of economy (credit based) to another (cash based), which will necessarily require me to… wait for it… stop paying my credit card bills. Oh, the irony! If you create a credit squeeze on me, my business won’t be able to buy on credit, either (because corporate cards are tied to personal accounts), which means my business will essentially be frozen, which means my business will go out of business, which means my reduced income will become zero income.

Oh, and many employers now run credit reports on potential applicants, which could mean I’d be unable to return to the big business, high-tech employers of my past if such a domino effect makes me appear to be untrustworthy to my potential future employers.

My wife and I have not let any other payments lapse. We are on time and on target with everything except our house, and we have reason to believe that we will be able to resolve the house situation before too long — probably through either  a sale or a short sale. But if this chain of dominoes leads to a run on our household, we won’t be able to stay solvent. And where does that leave any of our creditors?

For the time being, the best I can do is vow never again to carry your fetid orange card in my wallet again for as long as I live, and to refuse to accept Discover Card payments for my business (which, quite frankly, are rather rare in the first place). Of course, that won’t work quite as effectively if I lose my credit cards from Visa or Amex.

But even so, Discover Card, keep in mind this: you reap what you sow. Just as the account holders of banks can end up losing everything by giving in to panic, so too can banks lose everything by giving in to panic.

I’ll be back on my feet soon enough, Discover Card. No thanks to you. But thank you for making the challenge that much more interesting.

Give my regards to the horse you rode in on,

–Inris