American Express Randomly Cut My Credit Limit From $25,000 to $1,800
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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Comments:
Try calling American Express back and get someone with some intelligence on the phone. Some parts of AMEX's operations are outsourced. If you talk directly with AMEX, they should increase your credit limit.
Can't wait til the Amex Open Business Card loses its benefits. I love a 5% discount on gasoline, cell phone services, and office supplies.
The D&B reports are huge - it's a business' only credit report in many cases. You should seriously consider sharing at least minimal info with them to calm AMEX's nerves.
Given the current state of the economy and how fragile small businesses are, they're going to be a bit skittish about a business choosing to not share it's financial information. For all they know you're a cash business - cash in, cash out, and you use that cash to pay the bill. You could up and disappear next month with your balance.
Also, have you asked for a Financial Review from AMEX's Executive Customer Service? You'd be entitled to one.
Thats very sucktastic, they did the same to me...
Amex cut my limit earlier this year. when I called to ask what I need to do to get back to my previous limit, I was told I needed to get a score from Transunion and fax it to them, or wait a few months and see if they do a review and increase my limit.
Aw, man...that totally sucks for Pierre! :( (and everybody else this is happening to)
I really hope he can get this straightened out. Man's gotta make a living!
"Most banks are cutting their credit limits," says Carol Kaplan, spokeswoman for the American Bankers Association. "They're doing it to everyone."
Odd, I just got my limit raised $300 by Chase. Maybe it's a consolation prize for buying my bank. I got the letter literally the day the news broke. Of course, they also raised my finance charge for no good reason. Nice try, jerks.
For those of you not following AmEx lately, they've been decreasing the credit limits of a lot of people. This has been happening for a few months now. They've been slashing the limits of people who pay in full each month and have been "balance chasing" people paying down balances on their card.
And this is news?? What methamp said; they been doing this for months now.
Creditboard is full of AMEX credit slashing threads.
It's funny, Amex just tripled my credit limit last week. Not three weeks prior I had requested and been denied for a very modest increase ($500) because I was "high risk." Last week they changed their minds and decided to give me enough credit to buy a new car.
Happened to mine also. Mine was at 20,000. Now its at 7500. I've never came close to even 7500 so I didn't bitch too much.
Makes me glad I don't have an Amex card (well, the corp card from my employer doesn't count). So far I haven't seen this at Citibank or Wamu (my two main cards) - although I suspect WaMu will soon.
I has this happen to be a few years back. I'll have to check and see if anything has changed again.
I had the same thing happen with a BOA business line of credit within the past month. It was reduced from 30k to 12,200. It's not limited to AmEx.
I'd never used more than 16k, but that wasn't the point. How do you decrease the credit limit of someone who had never been late, and has significantly better credit now, then when the account was opened. I was more insulted than anything. I called and they increased it to 15k, but that was as far as they go.
Is this an Amex credit or charge card? With the latter, one is obligated to pay in full each month and doesn't have a published (ie, one you can see) credit limit.
It's definately time to get an Amex card without a limit.
Same thing just happened with my personal Visa. I have been a loyal customer for 15 years with the bill being paid in full every month. They just cut my available credit in half due to bank restructuring reasons. I guess cash will be king in this brave new world we are entering.
I'm not a credit card user so take it easy on me here. For those who are using credit cards and paying them off in full monthly why not just use cash for your transactions instead?
we have consistently paid our bill in full and prior to its due date. Doesn't that count for anything anymore?
No. Sadly it doesn't. Banks/CC companies hate people that pay in full before it's due. They make no money from good people like you. All their profit comes from interest charges.
Another "me too."
I was doing a balance transfer in August, moving away from a card that randomly upped my rate from 4% to 28% interest. They not only denied my transfer, but also lowered my credit line from 15k to 3k.
@sleze69:
There is no such thing as an Amex without a limit. All cards have a limit, it is just not a pre-determined limit. I have several Amex cards "with no limit", but at the time of the purchase they will still run my exposure and determine whether the purchase will go through or not. And in this day and age, every card "with no limit", will have a substantially lower ability to be used limitless.
This bad economy is making companies like Amex take credit away from good paying customers to lower their own market exposure. Not a good thing :(
@methamp: Uh-oh. I don't like the sound of that, since we've been paying down a modest balance on my AmEx, but I still put major purchases on it - things like hotel stays and the like. I just put a hotel reservation on it today; hopefully my balance will still be there when I actually go on my trip.
Is it Blackmail? Extortion? Hmmmm.
I don't get my big Wall Street Bailout - YOU don't get no loan or credit!
@DirtyBits: There are a couple reasons. AmEx has awesome purchase protection/extended warranties, for one. Other cards that offer cash back or points mean that you're racking up perks without paying the interest that usually eats up the benefit of such programs.
Also, it's handy to have a credit card on file for a business to handle, say, automatic delivery of supplies or to purchase stuff online.
My issuers have raised my credit limits recently.
DirtyBits:
For large purchases, you have more protection on your purchase in case something goes wrong.
For instance, I purchased a mattress years ago that had a 100% 90-day refund guarantee. Turns out, the mattress hurt my back, so after two weeks of constant pain, I asked for my refund. They refused. I tried several times over the course of a week to get the refund, and pointed to the 90-day refund policy. Finally I called the credit card company, who asked me to document everything in a letter and fax it to them. The card reversed the charge and the mattress company came and picked up the mattress.
Because you can't? I do all the ordering for a small business, and we paya bout 95% of our orders through credit card because that's what our suppliers accept. Using "cash" costs a lot more. If you use COD (assuming your supplier even still allows it as a form of payment) you're paying a nasty COD tag charge on the shipping.
With most suppliers, you call them, place an order and they immediately authorize it on your card or you tell them COD. There is no other option really. It's not like I can walk down the street to my supplier who's 3,000 miles away and make a payment like I could with a local utility, perhaps.
It's one thing to go buy a new light bulb for your store at your local home depot, sure then you can pay cash. It's another thing entirely to try ordering 6 cases of whatever from Texas when you're in NH.
@DirtyBits: four main advantages.
1. Warranties. Many credit cards provide a guarantee for consumer goods/electronics that are purchased on them. Sometimes as much as a year or two over the manufacturers warranty.
2. Chargeback. Obviously no one anticipates having to fight to get their money back for a bad product/service that was delivered as promised. If the company refuses to deal with you honestly then you ask for a chargeback (credit) from the credit card company
3. Building your credit. Sadly, wracking up debt is the only way to improve your credit score. Have a couple credit cards with a decent revolving balance (even if you pay before interest) really can jump your credit score.
4. Cashback/Mileage. Many credit cards provide incentives for using them. If you can take advantage of those discounts/promotions while not accruing interest then its like you are collecting interest on your own spending.
Again, all of this is moot if you don't learn how to budget and control your spending.
I'm definitely not in the best of moods right now. We're going on vacation in two weeks and reserved the hotel room with our AmEx.... so... typically we'll put everything on it then make a couple large payments each month, but I'm definitely hoarding a little more cash in my checking right now so I don't throw it all at the AmEx only to find my line of credit chased down and be stuck with no options.
@pal003: No I think it's more of the if we don't get bailed out, we won't have any money to lend. Period.
@acasto: You do have options. If Amex reduces it, call them. Then escalate.
I find it weird that Amex called him directly to tell him this. It sounds kind of phishy to me.
I have slowly been building up my balance on Amex while still making more than minimum payments. Last month they said that I can still spend but must pay for new purchases in full each month.
Bank of America obviously missed the memo that all banks are cutting credit. This morning I received a notice that my credit limit was being raised by another $5,000 from an already ridiculous amount.
That they were apparently asked for their financials implies that they were subjected to a financial review. AmEx is pretty cool about that if you send the requested information. If you don't, you're lucky to even have an account when they're through with you.
AmEx is pretty notorious for similar stunts, but there's usually more rhyme and reason to it than this. It just seems like there's a little more to this story.
Funny...same thing happened to me, except i went from no limit to 25,000 dollar limit... i received a letter referring to some credit report as well despite a spotless record
The OP is a microscopic example of whats going to happen on a much grander scale soon. Since he can't buy as much as he needs to do business,the whole chain of suppliers,employees and vendors will have less to work with. This is because the big financial center companies (like Amex) have pissed away good capital on bad loans to people that cannot/will not /never intended to pay.Thats the hell of this mess: The guy down the street (that got a liars loan) that took out a $650,000 loan based on a crooked appraisal from a mortgage broker who faked the numbers and then sold the loan to an equally duplicitous Wall Street firm will stick this guy and everyone else with the bill,bailout or no bailout.
When things get a little more settled,theOP needs to diversify his investing AND his credit. Line up other backup credit before you need it and keep current (like he is already doing with Amex) then you have some options.
Strangely enough, my credit limits for my Discover and Amazon.com Visa cards have been raised over the past few months. The form letter sites my on-time payments, despite the fact that I'm currently paying the minimum amount and that I still carry a balance over to the next month.
I guess I was thinking more along the lines of a Visa Cash & Check card. Where you get the advantages of a 'Visa' card yet you are actually spending your own money.
The end is near.
@DirtyBits: It's safer to carry around plastic which isn't one's money until the bill is paid. Lose a credit card, and the worst one would be out is $50. Lose a debit card, and it's a major fight to get back what's in your account.
Lose a wad of cash, and all of it will be gone, no ifs/ands/buts.
My Amex card was lowered from 11,500 to 4,300 (just above my balance at that time.) I never missed a payment for Amex or any other card. Emailing the president resulted in no help whatsoever.
Amex cut both my personal and small business cards severely (about 65 - 75% overall.) No reason given, good credit, absolutely perfect history with Amex itself. They cut limits on some cards to much less than I've spent on those cards many months. Several of my cards (I have 2 charge cards and about 8 credit cards) have had their limits reduced all the way down to $500. A couple cards that were in the $20 - 25k range are < $5k now.
I'm guessing the "secret" limits on my charge cards have like
Not happy at all. Will call back and speak to Account Services later, since the regular CSR couldn't do anything and I didn't feel like spending more time on the phone.
@psychos:
...mis-click action there. To finish what I was saying, I'm guessing the "secret" limits on my charge cards have likely been severely lowered as well. (For those with Amex charge cards and unaware, if you talk to Account Service they'll actually give you a reasonable approximation of what your actual secret limit is with a little pressuring. A regular CSR can do it too, if you want to play guessing games: you can ask for a $5k test transaction, then a $10k, etc, until you figure out your approximate limit.)
@Norcross: Did they pick up WaMu's credit card operations? That was unclear in all the reports I read, everything I read only talked about deposit accounts.
In any case, I just paid WaMu, the card still says WaMu, so it's a WaMu card until Chase decides to contact me and tell me otherwise ;-)
The great culling is happening as we speak. I think we all got used to giant credit limits over the past 10 years and finally the companies are having to realize the amounts offered shouldn't be nearly as high.
I found Pierre's credit limit - it's been added to my card.
Seriously, I went from $15,500 to $25,000 a few months ago...I do have excellent credit though, and it's a personal card, not business.
Weird how they're raising some people, but lowering a majority.
This is nothing new.
The biggest reason I see the OP's credit limit reduced is the fact that he pays in full every month. AMEX is not making very much money off of him. So they don't want him using a lot of their resources.
On the other hand a person who sits with the credit card close to the limit will have their limit raised so that person will spend more and the CC company will make more money off them.
That is about all there is to it. It has very little to do with the credit crunch. That may have only sped up the process.
"we have consistently paid our bill in full and prior to its due date." see thats your problem. Paying in full before the due date means no interest to pay to them. Credit card companies want people to carry balances, not pay them off!
Sad...
I guess you could sign up for an Amex gold card and have no limit.
For some reason, REM's "End of the World as we Know it" song is so fitting right now.