The shutdown magnet strikes again: Discover Miles and Paceline cards shut down

About the king of shutdowns

As one of the most aggressive credit card bloggers out there—Miles per Day—getting shut down is basically routine for him. This time, he got two more cards shut down: Discover Miles and the more obscure Paceline card. The reason, of course, is that he pushed them way too hard. Still, I do respect people like him who test things firsthand and lead by example, so I wanted to share what happened and also analyze why these shutdowns likely happened.

I’ve decided to organize some of the cards he has had shut down over time, partly to give everyone a broader sense of the different ways people approach credit card rewards.

Discover Miles

This card looks pretty ordinary, but in his hands it became a powerhouse. If I remember correctly, he has applied for it several times already, and each time he maxed it out aggressively, since Discover is relatively easy to game compared with most other banks. The first-year cash back match on this card, combined with its 1.5% cash back on all purchases, means you effectively get 3% back on all spending in year one. For most people, that 3% may not be especially meaningful, but for someone moving very large amounts of spend, 3% is substantial.

• His write-up on being shut down by Discover

Here is his card activity for June and July. In simple terms, he was cycling his credit limit. That means when the credit limit is low, he pays the card right after using it—or even pushes money to the credit card in advance—so he can keep spending on it quickly. As a result, his total monthly spend was several times higher than the card’s credit limit. From the bank’s perspective, even if you always pay in full and never carry a balance, this kind of credit limit cycling can still look risky. So in general, it’s a good idea not to overdo it. Keeping total monthly spend within about 2–3x your credit limit is usually considered safer.

• 6/21 – $3,000 charge (remember I have a $3,000 CL)
• 6/23 – paid off the $3,000 from bank
• 7/5 – $3,000 charge (it took them nearly 2 weeks to clear my CL which I thought was surprisingly long, but I figured it was due to new account.)
• 7/6 – pushed $6,000 of payments
• 7/8 – surprisingly noticed I had CL, so $3,000 CHARGE
• 7/9 – another $3,000 CHARGE
• 7/12 – paid the $3,000 from bank account
• 7/12 – Redeemed my 1.5%
• 7/13 – Pushed a $100 payment.

As for what he was buying, on one hand he resells things like gaming consoles, computers, and gold. That extra 3% is effectively 1% better than a standard 2% card. If he puts $100,000 on the card, that is an extra $1,000 earned. On the other hand, buying Visa gift cards costs about 1%, so this 3% setup means roughly an extra 2% in profit. If the volume is high enough—say, $100,000 in spend—that works out to about $2,000 a month, which is quite meaningful.

Evolve Paceline card

This was a newly launched card, and most people focused on the free Apple Watch offer. But for someone obsessed with credit card rewards, the 5% cash back at grocery stores and drugstores was the real prize. Those stores often sell $500 Visa gift cards, and if you can keep your cost around 1%, then an uncapped 5% card effectively means about 4% profit. So how much did he run through it?

• His write-up on being shut down by Evolve Paceline

He was getting more than $3,000 a month in cash back, which implies about $60,000 in monthly volume, and he kept that up for three months. Using the 1% cost and 4% profit estimate we mentioned above, that comes to about $2,400 in profit per month, or $7,200 total. So compared with that, the free Apple Watch signup perk is almost trivial. If you are willing to go big enough, getting shut down may not even matter much if you have already made the money.

Amazon account shut down, gift card balance confiscated

He bought Amazon gift cards from various channels and loaded them into his Amazon account, using them to buy Best Buy gift cards and place other orders. Amazon then emailed him to say the account had been shut down and the entire gift card balance had been confiscated.

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Setting aside whether he actually did anything against the rules, from Amazon’s perspective, loading a single account with large gift cards bought from many different stores looks a lot like the behavior of someone using stolen credit cards to buy Amazon gift cards and then cashing them out. If the real cardholder notices and disputes the charge with the bank, the merchant that sold the gift card usually takes the loss. That said, since these are Amazon gift cards, it is possible Amazon has arrangements with merchants and could also face some exposure. Confiscating high-risk accounts is therefore a reasonable option from Amazon’s standpoint: if the account really is fraudulent, then Amazon comes out ahead; if it is a false positive and the customer appeals, Amazon can just restore the account and the gift card balance. In that case, the main cost is some reputational damage.

For ordinary users, my personal suggestion is not to load too many Amazon gift cards into your account all at once. It is better to add them when you are actually ready to buy something. But Miles per Day is famous for hitting things very hard, and his scale is obviously far beyond what most regular users do. If you are just casually buying 5x categories with your credit cards, you probably do not need to worry too much.

As an experienced player, his response is also worth noting. In general, pushing back is often the only way to avoid losing money.

I think I’m going to have to BBB, CFPB, write to my attorney general, etc because it seems illegal that they can confiscate my GC balance without even giving me a specific reason as to why they closed my account.

A reckless move: ignored Fraud Alerts and got his FIA card shut down

The king of shutdowns, Miles per Day, is back again. This time, his Fidelity FIA credit card was shut down. The reason was that he spent $10,000 in a short period of time, triggered multiple Fraud Alerts, and then failed to promptly call in and clear them. The bank also tried calling him and could not reach him. So, to control the risk of potential credit card fraud, the bank simply shut the card down.

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Generally speaking, banks do not immediately shut down your card, but the risk department will evaluate your risk profile and recent activity to decide whether closure is necessary. Repeated Fraud Alerts with no follow-up can easily make it look as if the card has been stolen. So if Fraud Alerts prevent your card from working, you can switch to another card for the time being, but make sure you later call the number on the back of the card or respond to the Fraud Alert email. It is also best not to trigger Fraud Alerts repeatedly.

Three shutdown DPs involving Citi and Chase

All three DPs come from miles per day. You could really call this guy the king of shutdowns—just about every account you can think of has probably been shut down on him at some point.

Citi shuts down the whole family of accounts

This reader had relatively high statement balances on two AMEX cards, close to $20,000 total. He was also doing some MS activity on his Citi card every day, probably taking advantage of the pandemic-era supermarket benefits. First of all, the statement balance on all of your cards will appear on your credit report, and banks can see it by soft-pulling your credit report, so don’t assume a bank only has access to its own internal data. Of course, you can also pay part of the balance before the statement closes so that the balance reported on the statement is lower.

Last week, a reader had his Citi accounts shut down. He never spent over CL and figures there were 2 possible reasons. First reason could be because he had 2 recent AMEX statements close totaling over $20K. With the current climate, banks are worried about ability to pay, so they may have gotten nervous that he had balances that high. The second reason is the more common MS method with Citi, which he was doing daily. I’ve heard of others getting shut down due to this as well, so this is more likely the culprit (although once again, I know others who are doing this just fine.)

Either way, the lesson learned is definitely to try not to close cards with high balances in the current environment.

Chase Shutdown Across the Entire Family of Accounts 1

This reader had 7 personal cards, plus checking and savings accounts, all shut down, and Chase did not give a specific reason. But since the checking and savings accounts were also closed, it seems the issue was not just with the credit cards. Setting aside his statement that there were no MOs, could cash deposits have been the reason? In any case, it’s pretty puzzling.

My Chase closure: current state of affairs. As I reported before, all my 7 Chase personal CCs were closed early July 2020 (while I was on the road) . Later I received a letter which did not give a reason, only “We have decided to close your accounts”. I called the number and was told Chase will not give a reason, no reconsideration is possible and the decision is final. Let’s call this a hard closure. I received another letter that my checking and savings account will be closed on August 5. Fine, I emptied the accounts. I also have a Starbucks account which still works though I drained it today to avoid problems getting my money out, and I have an “You Invest JP Morgan” account. No closure notice on that one but when I inquired, I was told by JP Morgan side that the Chase side had “restricted” the account. He could not figure out why but told me that I needed to move the account out before it would get liquidated (not good because I had appreciated stocks in the account) . This was confirmed by a Chase branch (as far as they understood what an investment account is) .

I also called the Chase reconsideration line (I know, intended for CC refusals) , hoping that someone might disclose something but no luck, and I wrote a letter to Jamie Dimon, asking for clemency (“the punishment doesn’t seem to fit the crime” was my argument) . More about this later.
Now my 1 million UR points. Chase gave me 30 days to use them. I was pretty worried because I didn’t have a sapphire personal card to transfer points out. The rep tried to transfer the points but told me the computer wouldn’t allow it. Instead, a case was created and I would hear within 7-10 business days

Re: the letter, I received a call last Thursday from a Jeanine at the Credit Card Executive Office who told me she would investigate and let me know. She left her phone number in case I wanted to talk. I called yesterday morning and left a message but have not heard back. At this point, I’m ready to let it go. Chase refunded most of my annual fees (even a prorated amount for an AF I paid last December) . If Jeanine ever calls me, I’m going to ask her if there is any way a negative flag like “unsatisfactory relationship” can be removed from my name.

Just FYI, I don’t think I abused Chase in any way this year. I did do 2 x $1500 on Freedom Cards and I did 1 x $5000 on a Marriott card in “groceries” but that is it. I used the Freedom Unlimited at Simon Mall 3 times earlier in the year (Jan-Mar) . Never missed a payment, no MOs in the checking account; I only used it to pay Chase CCs. Sorry for the long story but I wanted to be as complete as possible. Chase is done with me but I am also done with Chase, at least for a while!

Chase Shutdown Across the Entire Family of Accounts 2

Six cards were shut down. He MSed $30,000 very quickly, and it was even unbonused spend... I have to say, the logic some Americans use is still pretty amazing. He also had a large balance on a 0apr card.

Too much MS too quick. Bought 30k in [unbonused spend] across 3 cards. Prompted an acct review because I was maxing out my available credit. I’ve done a ton of MS but I’ve read Covid has them on edge. 6 cards down the drain.

Average spend was always around 15-20k across portfolio in prior months and paying the balance off before statement close. Also was carrying 25k balance on a 0% apr card which was money I invested during April lows. What put my Acct under review was maxing out available balance on one card that had 40k limit. Like immediately after I made that purchase everything got locked up. Even though I wasn’t going to carry that balance it still tipped the scales