American Express says the credit crunch is messing with its bottom line. “We did see some negative credit trends among U.S. consumers during December, particularly in California, Florida and other parts of the country most affected by the housing downturn,” American Express Chief Executive Kenneth Chenault said in a statement.
Are you a cardmember? [MarketWatch]

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  1. ohiomensch says:

    Amex is messing with their own credit crunch. I am one of those “terrible people” who carry a balance on CC’s. Well I have had my eyes opened and am learning that for me, the only good credit card is no credit card.

    I lost my job. I was off work for 9 months, and I had to play it real close to the edge. I was never late with a payment, always paid more than the minimum, but once Amex got wind of my status, they lowered my credit limit to within 200 dollars of balance due, and everytime I paid it down, they would lower the limit again within 200 dollars of the balance, so instead of having a card with a 25k limit with a $15K balance, it looked like I was maxing out the card every month.

    Then the visa I had cut my limit in half, taking their cues from Amex. And then my dreaded credit score dropped because I had “too many cards near their limit” even tho I still had never missed a payment and paid more than the minimum. So now I barely qualify for anything and what credit I have has all readjusted their interest rates in the high 20’s, and even 30’s. I am determined to pay it off and walk away from credit at this point.

    Amex creates its own mess, then complains when their own practices create this situation. Its a hard lesson to learn and frankly I blame myself for falling in this mess, but it doesn’t help the bills get paid by raising interest rates and making it even harder to make the payments.

  2. swalve says:

    Yeah, I would guess that unsecured debtors are going to get worried when people’s house bills go higher. So?

  3. techguy1138 says:

    OhioMench-

    The story you described doesn’t seem like your fault. While carrying
    a balance on credit cards is never a good idea, having your limit
    lowered is beyond your control.

    You did your part by paying your balances on time and not going over your ever shrinking limits.

    I hope that you get out of the debt that you are. I never realized
    just how bad credit card companies can hurt their customers. It sounds
    more like a loan shark than a legimate credit product.

  4. wisepicker says:

    Maybe, it’s just a matter of the results of the risk assessment measures. By rule of thumb, the customers tend to feel uneasy when the limit starts to drop.

    Nevertheless, the market rules, and if Amex executives made a wrong choice – and there are strong chances they would – then in the next few months the customers would start to search higher limits on the competitors.

  5. LatherRinseRepeat says:

    @OHIOMENSCH:

    How the heck did AMEX find out about your employment status? It seems like they were snooping on you or something. It’s totally unfair.

    I was in the same situation as you. I was out of work for almost a year. But during that time, I had enough money in the bank to make the minimum payments on 3 cards (2 Visas and 1 M/C), and that’s on top of rent and utilities.

    After I got a job, I was able to pay off all my cards. And oddly enough, the credit card companies increased my credit limits. I guess they panicked because they couldn’t leech any more interest fees from me. Anyways, the end result was zero credit debt and a kick ass credit score.

    I wish you the best of luck. I know you’ll come out on top. I was thinking of getting an AMEX Clear card, but forget it now. They obviously monitor people’s finances somehow.

  6. I finally paid off all my credit cards on January 3. I’ve now vowed never to let things get out of hand again.

    Thanks, Consumerist!

  7. Jaysyn was banned for: http://consumerist.com/5032912/the-subprime-meltdown-will-be-nothing-compared-to-the-prime-meltdown#c7042646 says:

    @ohiomensch:

    How’d they find our your employment status?

  8. ohiomensch says:

    Unfortunately I told them. I was trying to seek out options for consolidating some of the other debts onto the card, and they must have noted it when I called them. After that, about every other month I got letters from them saying they ran my credit report and I was carrying too much debt overall, that’s when the limit reductions started. Like I said, its my fault and I went on faith of the advice that says when you are in trouble you can work with creditors, in my case, it just wasn’t true.

  9. klondikedog says:

    This just happened to me too. I have had an Amex for about 9 years. I carried a slight balance of $600 (I know I know). They kept reducing my credit limit until it was $700. Then I tried to buy something and it said my card was canceled. Lo and behold my card was canceled for something on my credit report. Ran reports with all 3 agencies and although my credit isn’t perfect (high 600s). I have never been late with Amex. I might fight it, but part of me just thinks its for the best. I am from Ohio too…

  10. HRHKingFriday says:

    Well, sooner or later two things were bound to happen. First, people (like on consumerist) decide that credit cards are really only good for emergencies. They carry zero balance, which means the credit companies get zero profits. On the other side, you have people affected by the recession and housing slump that are way past their limit and defaulting in record numbers. Which means profit, but not the same kind of long term “carry a balance with interest” profit.

    I say bring it on! They’ve been driving this false boom for over 20 years by creating unneccesary debt.

  11. econobiker says:

    @OHIOMENSCH:
    You usually can not tell them the reason you want to consolidate or even that you want to consolidate at all. I ended up with two Chase cards (one from Chase and one from a chase buyout). They wouldn’t let me consolidate both into one with 3/4 the original limit even. Said it was a “system” issue.

    Hmmm double the chance for over limits and late fees I think… Paid the mo-fo’s off and left Chase behind.