First, I wasn’t shocked by the fact that credit card companies share my information – I figured that out already given the fact that I get a bunch of random credit card offers in the mail, and coupons with my statements. I was shocked, however, by what Federal law protects and doesn’t protect.
Here are some interesting things to consider with Credit Card Privacy Policies:
What Do Credit Cards Do With Your Personal Information?
First, it is important to note what information credit cards collect:
- Personal Contact Information, such as name, address, phone number, and even employer
- Social Security Number and Income
- Purchase history and payment history (including, what, when, how much, how paid, etc.)
- Credit history and credit scores
Some of this information seems pretty straight forward – a lender will want to know my contact information for billing, and for recourse in case I don’t pay. They would also want to be diligent in lending to me, and as such, would run my credit scores and credit report.
However, what I don’t think they “need” to collect is purchase history. This is where the personal information collection gets murky and I disagree.
Why Do Credit Card Companies Collect Your Purchase History?
The sole reason credit card companies look at and use your purchase history is to try to make more money off you by marketing directly.
Federal law only requires two things:
- The company tell you exactly how they are using the information they collect (although many use odd jargon and long legal agreements to do this, so you still won’t understand)
- Allow you to opt out of information sharing with “non-affiliate” companies – which is pretty broad, but essentially meaning outside companies not related to the credit card company (but this does allow affiliated cards to share information with their companies, such as retail cards sharing information with the retailer they are affiliated with)
So, how do they use this information they collect:
- For marketing purposes (to offer products and services that may be relevant to you)
- For joint marketing with other financial companies (if they are a part of the marketing, it is not illegal to share information)
- For affiliates business purposes (this pretty much gives the retailer of a retail credit card free reign to do anything they want with your information)
Can You Limit What Information is Collected and Shared?
So, bottom line, if you don’t want the companies you shop out to know your spending habits and other information, pay with cash or check, and stay away from credit cards, especially affiliated retail card. If you don’t care, then use them all you want!
Readers, what are your thoughts on credit card privacy? Do you agree with what credit card companies are currently doing, or do you expect a right to privacy with your purchase history?
Robert Farrington is America’s Millennial Money Expert® and America’s Student Loan Debt Expert™, and the founder of The College Investor, a personal finance site dedicated to helping millennials escape student loan debt to start investing and building wealth for the future. You can learn more about him here and here.
He regularly writes about investing, student loan debt, and general personal finance topics geared towards anyone wanting to earn more, get out of debt, and start building wealth for the future.
He has been quoted in major publications including the New York Times, Washington Post, Fox, ABC, NBC, and more. He is also a regular contributor to Forbes.