Over the weekend, Doctor of Credit reported on a Bogleheads thread with reports of some U.S. Bank Smartly Visa cardholders receiving an email from the bank warning them not to use their consumer Smartly card to make business purchases or their accounts may be closed. This email did not go out to all cardholders and it isn’t yet clear what triggered it, but it’s worth being aware that there appears to be increased attention on the card for at least some cardholders.
We published a Card Talk episode about this card a couple of months ago as it can be an incredibly valuable card. That’s because it can offer as much as 4% cash back everywhere for those who can keep cash and/or investments with U.S. Bank. That’s an incredible return that makes the card the most rewarding card for everyday unbonused purchases by quite a margin for those who can meet the requirements.
I’d certainly expect that this card would appeal to heavy spenders. I’d imagine that some folks with high tax and insurance bills could probably also meet the requirements for 4% back and would find this card pretty compelling, so it wouldn’t surprise me if U.S. Bank has seen a higher-than-expected volume of purchase activity.
That said, it isn’t clear what has triggered the email. Here is an excerpt of the main body text from a comment at Bogleheads:
We hope you are enjoying your new U.S. Bank Smartly™ Visa Signature® consumer credit card. We would like to remind you that, as described in your Cardmember Agreement, transactions with this card are intended to be only for personal, family, or household purposes. It is important to know that federal and state consumer protection laws may not apply if you use the card for business charges. In addition, using this card for business purposes may result in your account being suspended or permanently closed
If you are interested in a small business credit card, we have many great products for small businesses, which can be found at . . .
The Bogleheads thread includes speculation about tax and insurance payments, but I wouldn’t expect either of those on their own to be the issue. My bet would be that the email was more likely targeted toward folks who had higher-than-expected utilization (in other words, those who used a high percentage of their credit limit and also those who have cycled their limit. By “cycle”, I mean using one’s full credit line, making a payment, and then spending more during a single statement cycle).
It’s hard to say how this will shake out, but I’d guess that if you were expecting this card to be a cash cow for your big purchases, you might need to re-think that strategy. It isn’t necessarily surprising that U.S. Bank is backpedaling here a bit. They were pretty firm around the launch of the no-longer-available U.S. Bank Altitude Reserve that they wouldn’t tolerate activity that they deemed abusive. I think that’s probably the message they were sending with the email here. Still, I think it’s a shame that they won’t just be clear about what is or is not OK (or certainly they should be clear with individual cardholders about which transactions are an issue). I don’t think anybody expects 4% everywhere to last forever, but it might be helpful if U.S. Bank designed some defined limits rather than leaving cardholders to guess at which purchases might be OK and which might not be OK with the bank.
Beyond that, it’s just not common to see banks get into the weeds about the purpose of various purchases. In my experience, I don’t think I’ve ever been asked about individual purchases on any of my cards (apart from being asked whether I authorized a particular charge that triggered a fraud alert). I’ve never had a bank question whether a purchase was for business or personal purchases, though card agreements may note that purchases should be limited to one or the other (based on card type). We don’t know at this point how aggressive U.S. Bank will be in policing transaction types, but it’s safe to say that they are keeping a close eye on card use.
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I got the notification even though only spent a couple thousand dollars over several months and no business charges. Not sure what triggered it but not too worried.
wow, I was considering getting this 4% card but guess not after reading all the horror stories… stick with my BoA 2.65%…
I spent $8k with apple pay on AR and got shut down the next week. Lost the points. And had the travel credit renewing next month too. What a scam.
And they were super rude on the phone. Phone line supervisor didn’t even know that the AR has been discontinued.
Was there any MS involved (or something that could be perceived as MS) ?
My sense is that US Bank is using the Smartly to attract assets but is intentionally limiting the rewards earning capacity of the card. Like me, anyone who uses the card to any substantial effect will be shut down. Even with bona fide purchases .
I got approved for this card with a measly 2k credit line. I have several other CC’s with 20-40k credit lines. There is no way I’m going to do what’s needed to make this a 4% earning card.
It would be better if they instituted a cap on 4% cash back and were upfront about it.
Least shocking news of the week here.
I got approved in Jan with $500 credit limit even with my credit score of 825 and high income. I did cycled my limit and got one of those letters. No business spending at all
LOL, $500? I don’t know that I would even have activated the card.
I had the Altitude Reserve. Used it for only bona fide purchases. A number of large purchases. My card was repeatedly frozen due to fraud until validating all purchases. Ultimately, a fraud unit representative expressly accused me of commiting fraud, canceled my card, and said all reward points would be forfeited. US Bank also closed my checking account. Quite offensive.