My payment history on this card is what American Express themselves calls “stellar” in their own records. Every 3 months, I call American Express and ask them to either:
- Raise by credit limit (careful, a high credit limit can be harmful too), or
- Lower the APR on the card
So far, they’ve done both in every case, granting me a higher credit limit and a nice, low APR.
I also check my credit scores every month online using “My FICO” and they are clean and pristine. Everything that was ever a mark on my credit has been removed and/or resolved. My credit score is rated as “Excellent”, and there are no faults at all on my history at this point.
So as a result of me being a good borrower, American Express decided to slash my credit limit by 30% (!!), the exactly amount of credit limit I wasn’t using on the card.
I called them, and after being on hold for 23 minutes, was put in touch with a representative who said they evaluate all accounts every 90 days, and that after their careful review of my account, they decided to slash 30% of my credit limit right off the top.
This, mere days after I just paid the card off completely. I use that card to automatically pay for lots of things like train tickets for my travel to work, my bandwidth at home, my hosting charges for my business, my mobile phone service, and so on.
For example, if I had a $30k limit on the card, and was using $10k of that limit, leaving $20k unused… they just took $10k of that right off the top, leaving me with an AMEX that now would have a $20k credit limit on it.
What this means to other creditors, is that my credit usage of my AMEX went from 30% charged to the card ($10k of $30k limit) to 50% ($10k of $20k limit), without me adding a single penny to the card. In reality, my balance went down, because of my payments to that card.
What happened as a result, is that the other credit cards saw the %’age of balance on my revolving accounts go up by this invisible $10k amount, that they decided to double the APR on my other cards; cards unrelated to AMEX at all. DOUBLE!
The APR on one of my other cards went from 9% to 18%, again, without a single penny going onto either card, no additional purchases. The APR went up, because AMEX took away my unused, borrowed credit.
But what American Express doesn’t realize (or perhaps they do!) is they’ve made the current economic situation MUCH worse than if they had just left it alone.
For someone with great credit, a rock-solid payment history and a relatively-healthy credit balance/limit ratio, I’m penalized. This is exactly how the credit companies stay in business, by cranking up the interest rates on people who are faithful, solid customers.
I feel bad for the people who rely on that credit limit being there and remaining available to them. What if Seryn or myself got into some sort of emergency and I needed to use that borrowed credit? I’d be screwed, doubly-so, because the interest rate on my other cards doubled.
You should be helping the economy, not making it worse. If you hadn’t done this, I’d still be using your card, still be charging items to the card, and still earning you a profit. Now, as a result of your actions, I’m now going to have to take a two new, additional steps:
- Pay down the card completely, and stop using it. (I won’t close it, because that would negatively affect my credit in a really bad way)
- Encourage others who are AMEX cardholders to consider switching to a different card, as a result of your questionable practices
American Express, shame on you!