Bye Bye, American Express

[JLTD]

So I mentioned in this thread that I'd had a horrible experience with American Express and that I'd post up soon....so here it is.

American Express (AX) issued me a card with a 15,000 limit. Due to some extraordinary expenses, I had to carry a balance on it for a couple of months, to a total of about $6000. Then, while on a business trip I charged an $800 hotel bill and minutes later received an email from AX.

In this email, they advised me that my limit had been reduced to $6800 since I was using too much of my available credit. Note that the only change to my financial picture during the last 6 month period was making the charges on this account, and letting it build for 2 months.

Of course I immediately called them to inquire what was going on. In the ensuing conversation with 2 different representatives (the first one in India who had no clue), I was told that if I paid them $3000 they would restore my credit limit of $15,000. I blinked, thought a moment and slowly repeated to the representative:


Me: "So let me get this straight. AX authorized a $15,000 credit limit. Then when I used less than 50% of that authorized credit, AX reduced my limit because I was using too much of what they said I qualified for. Is that correct?"

AX Rep: "Yessir."

Me: "So now, if I pay $3000 then AX will restore my credit limit to $15,000, which I have just been told I could not use more than 50% of.

AX Rep: "Yes, sir that's what I am saying."


So I shook my head and verified that was what the rep was saying, rephrasing a bit to insure things were clear and I had heard right. I had.

Not only does this seem like some form of extortion to me, but is completely ludicrous to tell me It's ok to use something then when it is used, it's no longer ok. Simply amazing. Recall that my financial picture had not changed during this time, other than the charges on the AX.

End of the story is that was the only card I had carried for quite awhile and I needed it to complete the trip. I called back and had the next rep authorize a "temporary increase" to get me back home.

Once home, my first action was to cancel the account.

Member since 2013; never again will I patronize that company.

Never. Again.

 

[The Critic]

Is this your only credit card? I wonder if your overall credit utilization was reaching a certain threshold.

 

[Garak]

I don't blame you. After all, that's what a credit limit is for, should you choose to use it. Now, I'm assuming you made at least their minimum payment and weren't in arrears.

 

[Wolf359]

Always have multiple cards. In a way I don't blame them. Lots of people charge their cards up to the max and then default. You might have been following that pattern. Maybe if you had charged up the max and paid it off at the end of the month, they wouldn't have cut your credit limit. But you were building a balance and they were worried you wouldn't be able to pay it off. People lie all the time about their current situation and it's hard for them to verify the information that nothing had really changed at your end. Could have been a divorce starting up, sickness, gambling problem/drinking/drug problem starting, job loss etc.

Also with just one card, what were you going to do if you lost it?

 

[daves87rs]

If they are going to make money on interest, why would they are as long as you made the payments?

 

[Mr Nice]

Originally Posted By: Wolf359
Always have multiple cards. In a way I don't blame them. Lots of people charge their cards up to the max and then default. You might have been following that pattern. Maybe if you had charged up the max and paid it off at the end of the month, they wouldn't have cut your credit limit. But you were building a balance and they were worried you wouldn't be able to pay it off. People lie all the time about their current situation and it's hard for them to verify the information that nothing had really changed at your end. Could have been a divorce starting up, sickness, gambling problem/drinking/drug problem starting, job loss etc.

Also with just one card, what were you going to do if you lost it?


Yep. Long time ago a couple I knew were about to get divorced. The wife ran up the credit cards , even got breast implants.

About $30K in credit card debt, then they declared bankruptcy.

 

[Johnny2Bad]

Amex is not like other CC companies. Adjusting limits downward when you exceed the recommended credit utilization rate is normal for them.

Your utilization rate is your total net income vs your total debt ... mortgages, all cards, bank loans, normal recurring monthly bills such as for utilities.

As the % of debt to income rises, you Credit Score declines (although it is only one factor). Although your score can influence them, the change in utilization rate is usually the reason for an Amex limit reduction. Your use of the card may have moved you to a threshold point where they act. The offer to restore your limit if you pay $3000 is a clue, you can use that information and your knowledge of your personal finances to determine the rate threshold they are using (hint).

Your cancelling the account was a mistake. It has lowered your credit score instantly (the total credit you have available to you has fallen), which will cost you money one way or another.

Hopefully you have other cards that you have been using longer than 2013, because the first rule of credit is NEVER cancel your first card. Cut it up, never use it, but don't cancel it. How long you have had current cards is another critical feature of your credit score.

 

[Andrew1972]

I could be wrong but AMEX I have always understood is a credit card that you do not carry balances and discouraged. It seems to align with your situation given you did carry balances.

 

[Johnny2Bad]

Originally Posted By: madRiver
I could be wrong but AMEX I have always understood is a credit card that you do not carry balances and discouraged. It seems to align with your situation given you did carry balances.


As one of the world's first revolving credit cards, the original AMEX did not have a credit limit. Large purchases were approved on a case-by-case basis. You were expected to pay the balance every month in full.

Current versions of the AMEX card are more like VISA, etc in that they are interested in earning interest. However, the company DNA doesn't change much; they are very much a card that monitors your credit on a continuous basis. Maintaining an AMEX card over a long period of time carries more weight with lenders than other cards.

 

[Imp4]

Amex is analyzing your credit profile, account history, and usage patterns.
They then hedge their assessed risk and adjust your approved credit limit to account for this assessed risk.
This is what a responsible company does.
The result is a customer experience (yours) that is less than desirable but, from the company's perspective, risk averse.

I promise, promise, promise that buried within the 97 pages of 4 point type user agreement that you agreed to when you signed up and used this card, that you agreed to let them do this.

And now, curiously, you are upset about it.

Amex also agreed to restore your $15000 limit once you paid $3000. They are looking for you to demonstrate some cash liquidity.

So you can either choose to do so or not. Your choice.

There's an old saying in business that goes along the lines of 'You should know when to fire your worst customers'.

They are likely viewing you as high risk and not worth the $15000 limit. So in this case, choose to play by their rules or don't.

It looks like you chose to not play by their rules and end the relationship.

Likely, both parties here are happy.

 

[DuckRyder]

AX now has multiple card types.

Be interesting to know which one we are speaking about. AFAIK the typical AX Green, Gold, Platinum card is still a charge card expected to pay in full every month but has the option of a “sign and travel” account that allows you to carry a balance.

Been a while since I had one with a sign and travel, but all I remember it ever saying was “no preset spending limit”...

 

[hatt]

I can see where your changing habits set off the red flags. I bet many other cards do the same thing.

 

[Rolla07]

Id bash them on twitter too just for fun. That is just ridiculous.

 

[RedOakRanch]

Which card do you have? If it's the green gold or platinum they are charge cards, not credit cards. If it's one of thier many other true credit cards then your situation seems odd.

 

[JLTD]

This is the blue card, with set limits and unfortunately for a short time, interest. Not the gold or green payoff each month type.

Yes, I have other cards and will be carrying them instead from now on. I was carrying a backup at the time, but it was the principle and inconvenience.

Johnny2bad and Imp4, thank you for your analyses. As mentioned in the original post, the only change to my financial picture was carrying a balance (admittedly growing) at AX for 2 months. Like 99.9% of card users, I did not in fact read the 32-page lawyerese for my card.

I don't mind a card company reducing my limit if they think something's amiss; they're not only protecting themselves but in a different way of thinking, that mindset is also protecting a consumer who is running up a card rapidly. I get it.

However as a responsible card utilizer, what I DO mind is an email out of the blue saying it's been reduced. How about some customer service, a call from a specialist noting what's happening, maybe a warning or inquiry about your situation getting close to their threshold, before they lower the boom on you while you're obviously traveling? The other thing is "Pay money and we'll restore the arbitrary credit limit we just told you you don't qualify for any more" hypocrisy. Or at least have the representative I spoke with explain why, apologize for not notifying me earlier, offer a temporary increase up front. SOMETHING. I suppose I should consider myself fortunate they bothered to send an automated email?

We all have ups and downs in life, financial and otherwise. A blip on someone's credit radar shouldn't invoke a full scale response. Right after college, I maxed out some Visa cards and created a mess. Guess what? Not once did any of them reduce my credit limit. Not once.

So AX can go blow.


edit: Yes Garak I was current and not in arrears.

 

[CincyDavid]

Anecdotally, AMEX allows one to carry a balance, but actively discourages it. They make their money on transactions and don't care to make money on interest, unlike someone like Capital One who lives and dies on interest charges. I have 4 AMEX accounts, and they are my "daily driver" credit card issuer, but I ALWAYS carry a MC and a VISA, in case AMEX decides they don't like me, or I find a merchant who doesn't accept AMEX.

Being balance-chased is not unheard-of. Barclays is known for it, and apparently Chase is doing the same thing. The banks may also be assessing their exposure, given that the never-ending bull market may finally be faltering. Perhaps they are tightening the reins.

 

[Astro14]

Interesting.

Totally different experience with AMEX.

Had the card for a while. Several unusual expenditures, and ran the balance up. Paying it down now.

They never said a word and, in fact, they even upped my limit.

When I got very close to the limit, there was no communication, no change, other than to INCREASE my limit.

Perhaps because my income level is different? Perhaps because I paid far more than the minimum every month?

 

[JLTD]

Originally Posted By: Astro14
Interesting.

Totally different experience with AMEX.

Had the card for a while. Several unusual expenditures, and ran the balance up. Paying it down now.

They never said a word and, in fact, they even upped my limit.

When I got very close to the limit, there was no communication, no change, other than to INCREASE my limit.

Perhaps because my income level is different? Perhaps because I paid far more than the minimum every month?



Wow completely different experience for sure. Curious if you received a phone call or anything when they raised the limit?

 

[Bud]

I have never had a problem with AMEX. But I do notify them if I am traveling through different states on a trip or will be making any larger than normal purchases. With all the fraud going on today I just feel its a good thing to do.

 

[Sam_Julier]

I've had an American Express Card since 1989. During my salesman years I would charge $5-9,000/month. I have never had a single problem with the card. The few times I put a charge in dispute they resolved it immediately. The card number was stolen while traveling in Europe. They contacted me within moments after the first fraudulent purchase was made, assured me I was not going to be charged, and had a replacement card delivered to the hotel the next day. AMEX service service has been exceptional in all regards.

Sam