Reader Pierre is a small business owner who has an American Express Business Account that used to have a $25,000 limit, but has now been cut to $1,800. He says his company’s bill is usually around $12,000 a month, and it is always paid in full — on time. While Pierre is clearly upset with American Express, the Wall Street Journal says that all banks are cutting access to credit.
Pierre says:
I just received a shocking call from American Express.
My small business has had an American Express Business Account for the past two years. Our credit limit was around $25,000 and our average bill was approximately $12,000/month.
We have NEVER had a single late payment and, according to Amex’s customer service reps, our spotless payment history is considered “perfect.” In fact, most of the time, we pay our full bill prior to the date it is due.
So imagine our surprise when Amex called us today to inform us that our new credit limit on the account was $1,800. When pressed for details, the Amex rep made some vague references to a credit report.
However, our credit report is spotless. The only possible factor could be the fact that, since we are a private company, we do not share our financial information with Dun & Bradstreet.
Our company has bank lines worth several millions of dollars. We have been a loyal Amex customer. In an era where defaults are soaring through the roof, we have consistently paid our bill in full and prior to its due date. Doesn’t that count for anything anymore?
Maybe not. The Wall Street Journal says:
Credit-card issuers have been decreasing credit limits in the wake of the subprime meltdown. Folks with good credit scores and solid credit histories are now getting caught in the fray.
“Most banks are cutting their credit limits,” says Carol Kaplan, spokeswoman for the American Bankers Association. “They’re doing it to everyone.”
(Photo: Getty)
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I get that the OP is talking about a business account, but how do these practices affect retail customers? My understanding is that credit limits are getting slashed left, right, and sideways, and I’m just waiting for it to hit me. I don’t usually carry a balance on my card(s), and when I do it’s for no longer than two months total, so my day-to-day spending wouldn’t be affected. But what about my credit score? Will changes to that precious debt-to-available-credit ratio affect my credit scores?
*sigh* I hope USAA doesn’t do this to me with their card. I got it and used it to transfer a balance, which I have been paying down since I get 0% for a year.
@theblackdog: So they are not making a profit off of me right now. However, when this is paid off, it will be my main credit card since the interest rate is much lower than my other card.
Bank of America just did the same thing to me even though I pay on time every month. Oddly, I still have others that are increasing my limit without me asking.
Amex closed both my accounts with no provocation last year. I was a month late on my Macy’s bill and that was the only negative item on my credit report so I assume that freaked them out. My balance on both AMEX cards was $0 at the time, but I try to warn people that AMEX can freak out on you and screw you with no warning. Also I didn’t get a letter from them about it for over a month.
If you pay your bill every month in full…two things:
1. You aren’t making the bank any money.
2. Why do you need a credit card?
@jimv2000:
1) True.
2) Lots of reasons. It can be used as a safety net in case of emergency. You can use it to build good credit so you can take out loans for things such as cars, houses, and businesses. Or you can use it for rewards, such as travel points, cash back, or gift cards.
I’m sure other smart cookies in here could come up with some more ideas.
@jimv2000: Easy, just read all the horror stories on Consumerist of people who got screwed because they made a large purchase on their debit card or with cash and the company fails to deliver the product or honor a warranty.
Using a credit card can mean that you get an extended warranty from your credit card company, and you have the power of the chargeback if you have a legitimate complaint and the merchant fails to remedy the problem.
I just received a notice from Chase increasing my credit line by $2,000. No word from Bank of America, or my other card from Chase, yet.
Tender spot hurting a lot? Other side too? bruises on your face and body throbbing? Is that blood running out your nose, skirt above your head in the wind, panties torn and soiled, titties swelling and turning blue by the minute, lost on the roadside, hoping not to die? Did you recognize the tail lights of the limo that threw you off? Was it the same limo that picked you up at election time, promising a good decent clean ride? Will you ever learn? Last time these guys did this to you, your babies were killed in Iraq and your retirement fund spent to do it, your taxes went up, you did not get destroyed by the weapons of mass destruction, they were never found. Poor little America. Our heart-felt prayers from Canada go out to you!
On a semi-related note, a few years ago, after a heated exchange with a BoA “account specialist” over the bank’s refusal to lower the interest rate on either of the two cards I had at the time, the credit limits on both cards were mysteriously lowered by 30-40% apiece. I received notification by mail two weeks after the phone conversation. “Funny” thing about said conversation is the rep was being as sarcastic and snotty as I was. I guess she thought she’d exact a little revenge.
On one of my cards that I expected my limit to go down (crappy first card, non-major bank), it went up by 100% ! It was no small increase. Silly silly bank. Eh, after pretty much every purchase posts, I transfer that amount from my checking to the credit card companies, anyway.
You can’t just ‘share’ with D&B. You have to pay them money to share with them. They won’t take anything but your name and number for free so to get them to show your lines of credit you have to pay them (this was the promo price for September) $499 to ‘share’ 6 of your creditors with them.
Seriously. Just got off the phone with them this afternoon. They have messed up a lot for our company because, like this one, despite millions in loans they show our highest credit limit as $2,000.
I’m starting to think “new software formula at AmEx.” They’ve changed the rules in their little black box and it’s slowly being rolled out. It doesn’t sound like it’s purely the credit crunch, since some people are having their limits raised.
That is unbelievably inconsiderate. But with rough time comes rough measures and credit companies all over and tightening the credit they have gave to customers as they are afraid that they will not be able to pay it back. After all, American is the greatest debt nation in the world.
Same thing just happened to me. Customer since 1986 with a Platinum Card. Cut unlimited credit limit to $1300 credit limit. I have cashed out my 181,000 membership award points and am cancelling ALL cards with AMEX. It will be a cold day in hell when they get my business back.
They did the same thing to me. I’ve been an American Express card holder since the ’80′s with a perfect payment record. I have had a Platinum card (for over 10 years) that is paid in full 100% and NEVER late and, recently (last year) got a ‘Starwood’ points Business card that had over a $40K limit on it that I pay in full for the most part (and had a low balance on it).
They slashed my credit limit two times (with no explanation – I actually make MORE income since I applied for this card) since June on the new Starwood card. Now it is at a useless $2,500. available credit (I travel a lot for biz and that barely covers a trip). AND – worst of all, I hear that when a card company does this, it lowers ones credit score! I am thinking of canceling this useless card and will never use this type of card (where you can carry a balance) at AmEx ever again.
What a bunch of idiots to do this to loyal customers. When good times come back, rest-assured they will have lost many loyal customers by treating them so poorly. They’ve lost me, a loyal customer for over 20 years at least….
I was upset with American Express because they had lowered my limit by 75% over the past 3 months and had flat out lied to me trying to justify their actions. As a small business I have used American Express as my working capital over the past 10 years, so their reduction in my working capital was a real slap in the face and really hurt. At first I took it real personal and thought they were picking on me but have since learned that they are doing this to most of their customers. In September alone they lowered the credit limits of 20% of their card holders and day by day they are doing it to more and more. If you have some extra time and want to be stunned, Google “American Express credit limit” and you too can read horror story after horror story.
Just last night my sister went to use her AMX card at CostCo and it was denied. She got home and called American Express (1/2 hour on hold) to find out that her cards limit was dropped to $600 (just above her balance) from $16,200. This girl has impeccable credit and they did this to her. The customer service rep told her that it was lowered because of a “Public Record” input on her credit report. She immediately pulled her credit reports and found no such entry on any of the credit reports. Funny thing is that an American Express customer service rep tried that line on me too yesterday morning and I too immediately pulled my credit reports. Not finding this “Public Record” entry on any of my credit reports, I called American Express back and ask them what they were talking about and of course the representative tells me he has no idea why the last representative told me this as he sees nothing in my file like that.
So be prepared to have your credit limited dropped drastically for no reason or to have it chase down your balance with no warning. When you do call them to find out why, be prepared for a long hold time and have your credit reports in hand so that you can call them on their mistruths. It is a very sad day when the employees of an icon like American Express have to tell you flat out mistruths to try to justify their higher-ups actions. But they are only trying to get you off the phone so that they can answer the next call in the very long queue of callers wanting to know why their limits were reduced too.
Sorry for the very long rant but maybe this will save you some embarrassment while trying to use your card. It is no wonder that American Express announced yesterday that they will be laying off 7,000 employees (10% of their workforce) as they don’t want us using our cards.
Wow! I thought I did something wrong! Each Bank card one at a time, changed my interest rate up, and cut my lines. All of them of the last 4 weeks. Great! We bail them out, then they take all our credit away & raise our rates. Wish some of the big guys would see what they are doing to all of us. They should have negotiated for the customer/consumer before they gave them all that money! Take it from both ends, that’s what they did!
I have a similar story, only on my personal account. I had the American Express One Card with no limit. Yesterday, I went to buy my wife a Christmas gift at a store where the people knew me. My card was declined. Confused, I called Amex to discover that my credit limit had been reduced to $5,000 without my prior knowledge. I run a balance between $4-7,000 every month, pay my bill in full, and have never been late. I talked to over 10 people at Amex who informed me that they are changing the way they handle their cards. They have sent over 1.5 million letters in the past week alone telling people that their credit limits have been decreased. To beat all, I have over $5,000 in my Amex high yield savings account, so my card is not even as good as my check card! Way to go Amex, way to piss off the good customers.
It happened to me too. I had perfect credit for over five years with Amex. I have a 721 credit from experian (which btw is also the excuse Amex used when I called).
I had a 35K credit on my platinum card, with a rolling credit. Now, every time I put money towards the card, they just reduce the credit, mumbling some lie about experian scores. Even claimed I had an “bad credit with another credit card company” – which I don’t have.
I guess the bottom line is: “I realize there’s a credit crunch, and that Amex has no money” virtually almost bankrupt. But I am disappointed in the poor way of communicating with loyal customers, who they have made fat and reliable interest from for years.
That’s just not ok.
I just got the same notice. I use this card to pay for travel expenses that are reimbursed by my customers at a later date. They are applying the same logic to small business customers as they are consumers who pile up bad debt. I use this card for business purposes only and this reduction in credit will hamper my ability to do business. Take that logic and apply it to all small business’ in America and the result will be less business being done resulting in less jobs and more financial failures. American Express is lying when they say they want to help small business owners grow. This shotgun approach is a typical corporate knee jerk reaction to the credit crisis that will only make things worse. Why not go after bad debts that are real rather than limiting the ability of their best customers to do business. My choice is to take my business elsewhere where it is appreciated.
AMEX put a credit limit on my account of $1,500 on my gold account. I don’t believe I had one before.
I’ve had an account with them for almost 40 years.
I was late last year so I don’t blame them in today’s environment. I do object to the heavy handed way that they did it with no notice.
They turned dow a charge, 3 days later I got and email with may credit limit and a week later a letter in the mail.
This just happened to me today. I have a great credit score and have always paid my AMEX Gold Card balance off each month. I tried to pay my taxes online with my AMEX Gold card today. It was declined, so I called AMEX and was told by a credit manager that I have gone over my average monthly spending (along with the tax payment charge and a charge for a vacaction). I have never had this issue in the past, so I can only assume this is because AMEX is in financial trouble and is attempting to get customers to pay their balances down before filing bankruptcy.
i too have been hit by random credit limit slashing ony they said there were things on my credit report that helped with the decison, i printed out my report and could find nothing,. so they arbitrationly just cut me. i plan to fight
Happened to mine also last night, reduced it from 20,000 to 1000, what i found upsetting was that i have been a customer for 15 years, charge around 10k each month for my buiness on it, and almost always pay it off each month. i’m canceling my card, who treats their good customers this way?
I am so infuriated at AMEX I don’t know what to do! I have been a loyal, on time paying customer for 25 years.
In my business, they, for no reason, cut my credit limit to $200.
I had a $15,000 credit limit.
WARNING to anyone out there using AMEX: DON’T! Don’t use them! They are driving good paying customers out of business.
I detest them now! How could they do this to my company after all these years? It doesn’t pay to be honorable any more.
I was mad, upset and angry as they did this with no notification. When i called to question I was told it had to do with my credit. My credit score si 780. Whatever. do not get made, get even. Pay them off, cancel the cards and tell them to hit the road. That is what I did. Never again American Express. Live cash and try as hard as you can to pay everything off. They only care about profits and themselves, not taking care of you.
AMEX is screwed up in Australia too. Two years ago I voluntarily reduced my AMEX limit from $33K to $10K – I no longer needed a $33K limit. Then last week AMEX decided to clip my limit from $10K to $8500 – without warning, notice or reason (I called them and no one seemed to know the reason). Like others, my card was always paid on time. Their petty $1500 adjustment just cost them a customer. I just reduced my AMEX limit to zero as in I dumped them and have gone across to Visa – Visa is accepted in way more places anyway.
AMEX need to understand the deal. Don’t mess with a paying customer’s limit without notice when they are abroad on biz.