My DH and I had substantial credit card debt (and substantial credit lines). We never missed a payment, never had a late on any of them. We decided we just didn't want to continue to carry the debt. Fortunately, we had money to fall back on to pay off these large balances. We owed about $50K in various accounts to BOA, Amex, Amex Blue, WAMU, and a few others. We paid all of the accounts in full before the due date. Now, each one has dropped our credit line to somewhere between $200-$500 total. BOA dropped us to $200 then cancelled us! Why did this happen? We paid it all off within the rules completely! Also, what is this going to do to our great credit scores? Will it read, "high balance $15000, credit limit $200?" Won't that be a giant red flag? Someone please comment and let me know what to do now. Something tells me that I have a bigger problem now than the debt!
This is indeed a strange one, I can understand the AmEx cards reverting to a low limit, but the BoA is very strange. I would defintitely call the issuers and ask for an explanation (in writing!). Obviously you had substantial credit lines, and if you had no negative events, it makes no sense. Onyl questio, where you over on any credit limits?
The quick answer to this is "no." We were over by $25 to BOA one time--I took a cash advance, allowed for the service charge/interest, and misjudged. I was over by $25 after the transaction all shook out. We were charged the OTL fee. I paid it. The end. Ironically, there were 2 different odd issues at play in all of this. We had an AMEX green account that was over 20 years old. It had about $3k on Sign and Travel. Amex ABUSED us. They cut us off at every turn--declined $30 charges, put the entire account on a temporary hold, refused disputes, etc. We went from the best AMEX customers ever, to the worst they had. Again, no missed/late payments. I was told by a mgr it was because our debt was too high. Also, they look at the last 6 months average spending. If you fall outside those average perameters, it is a bad thing at AMEX. The catch 22 was....they wanted us to charge more, but they cut us off from charging more. I still haven't fixed that problem. There is lots of speculation about FICO scoring on this board, always has been. I think this situation may be another of the "I didn't know that factored in" moments. I can't help but think this is going to have an extreme adverse effect on the score. Literally overnight, our $55K credit line dropped to less than 1K. BOA cancelled us all because we paid off 100% of our debt. Who knew this would happen?
BizWiz, why do you say you would understand AMEX cards reverting to a low limit? Why would they be any different than any other? Just wondered. After 20+ years with Amex, I realize that I don't understand their workings at all. Thanks for the input.
The traditional AmEx cards are "charge cards", not "credit cards", hence they do not have a true "credit limit", (as in a revolving sense). The "charge cards" do behave differently than credit cards, so I can see AmEx reporting a lower "charge" amount.
My issue with AMEX lies in the change in THEIR behavior, not mine. I got the AMEX green in college. I have used it to survive as a student, for daily expenses, vacations, and for business expenses. I could have done commercials for AMEX. They were never anything but good and fair to me. Of course, I also never missed a payment and never paid short in 20 years. Throughout the years I have had monthly bills of $100 and monthly bills of $25,000 (business expenses that were reimbursed). Never did they even question a charge of mine. I also never lost a dispute with a merchant in 20 years. Now rollforward to 2007--I can do nothing right! Everything is questioned. I don't know if I can put a tank of gas on AMEX or not--today the answer may be yes tomorrow it may be no. Seriously, taking all emotion out of it, I can not predict their next move. I finally found a manager at AMEX that would talk to me. He said AMEX had moved to a rolling average ideaology. Every month their systems calculate your average charging for the last 6 months. If anything comes in higher than that, it is declined (regardless of your past history or ability to pay). For all other charges, when the sum of the smaller charges equals the calculated average, they cut you off. It is just a new way of AMEX thinking that I am not used to. The manager told me to get my average up as quickly as possible and they would leave me alone. Well, I can't get the average up, because they cut me off! They really are no longer a value to me--I have to use the card on their terms, not mine. I seriously have considered cancelling the card. I did cancel the AMEX blue a few weeks ago after paying it off. If I do cancel it, my longest credit line is gone. Even though they are a charge card, not a credit card, wouldn't that wreak havoc on my score? Anyone with any AMEX experience please chime in! Thanks, Lisa
This is all very interesting, a new insight into AmEx! I have not run into this issue with AmEx (yet!), but I guess I need to be aware. Our AmEx has run about the same monthly amount, but has been declining on an average over the last few years, so may be I'm headed for this also! If you cancel the AmEx Green, it should still stay on your credit report as a tradeline, though it will show closed. It should still count towards your credit history, so it shouldn't effect your scores. If it were me, I think I would cancel it; the only advantage to these "Charge Cards" (over credit cards) is the "no limit", and not having to worry about a charge being declined. I would have to ask what happened to their famous commercial of the young executive at dinner whose Visa was declined, then got the "AmEx" to never have to worry about that again! I assume you are not using the Rewards point program, being as it is the Green card, so what is the point of the card? Personally, I only use these cards for business expenses, or travel. Again, only for the reason of "no limit/no decline", to eliminate any worries of being "stuck" in a situation at a business dinner or the airport. The rewards programs are nice, and the travel benefits help too, but these cards are really not worth the fees for everyday use. I know it seems ridiculous how they are treating you, but I would call AmEx and tell them you'd like to cancel to see their reaction. Did they try to "upsell" you to another card level (and fee)? Just wondering.......
Biz, I am a CPA by trade. I fully understood the AMEX manager's discussion of a "rolling 6 month median computation." Sounds good in meetings at AMEX I'm sure. I understand their goal--to stop a potential problem before it becomes a problem. Granted, this is a responsible angle. As in most financial analysis, you have to be aware that there will be situations that fall prey to the new plan that you didn't mean to affect (namely me!). I am in a no win situation with them. I can't overcome the 6 month average because I stay cut off most of the time. Last month I had 11 days I could use the card and 19 that I couldn't. No one at AMEX can explain that to me. I have been declined for $8 and approved for $120 in the same day. Each time I use it, I hold my breath and wait for the receipt to start printing. There is seemingly no rhyme or reason to when it is approved and when it isn't. I think what drives the approvals/denials is that average taken to the next level. I'm sure there is a further inter-monthly calculation that measures the benchmark by day. When your account is compared to that internal calculation, you are approved or declined accordingly. I can't explain the "yes" and "no" in the same day. That one eludes me. I got robbed on the AMEX blue in the same way as WAMU and BOA. I had a high balance (not over the CL, just bumping up to it). I paid it off in full, they dropped my CL from 15K to $200 overnight. They were the first to do this. I was furious. I called them, got the runaround, and cancelled over the phone in a huff. Well, the attitude completely changed. If I would just be willing to update my personal information (huh? they had everything correct and had for 20 years!), they would reinstate my CL and give me an increase to 20K! All of this in a 5 minute phone call. I went from S*it to a star! I still cancelled. I didn't have a need for the card, and frankly, I didn't trust them by that time. I have membership rewards on the AMEX green. I had it on the blue as well. Because I don't use the card nearly as much as I used to, the points don't mount up as they used to. So, it really isn't much of a reason to keep it. Besides, the program costs $40 per year! I, mistakenly, thought that closing an old tradeline would have an adverse effect on the score. Now that I know that it won't, I really don't have much reason to maintain the relationship. I just HATE being treated like a loser--I am the same person, in the same house, the same job, etc. The only thing that has changed is the way they analyze their accounts. Be ready......the same thing is starting with one of my neighbors.....a 15 year long good AMEX relationship has gone completely haywire. She went from being a pharmaceutical rep to a stay at home mom. Her spending declined, and they have done the same thing to her. It took about 9 months to really start to hurt her. Thanks for your input. I will post what happens with AMEX and BOA. I did nothing to deserve this rotten treatment. Oh yes I did! I forgot! I paid off my balance!
For my 2 cents regarding AMEX - when I started having credit problems several years ago, they were the first to pile on and beat me up and filed a judgment against me before other cards did anything and then they (the other cards) were working with me toward solutions. That's ok, though, because I was having problems making all the payments, etc. On the other hand, my brother hasn't had a late payment in over 20 years. He has purchased houses on credit cards (several times!). He has one of the AMEX cards that carrys a balance and used it to purchase a house with one of the 'convenience checks'. As he paid it down, they kept dropping his limit. He's now down to half the limit he had and they'll likely keep dropping it as he makes the payments. The only thing I can think of in his situation is that his utilization is pretty high right now. He hasn't had any problems making payments and hasn't been late or otherwise demonstrated adverse activity. He's upset with them, and for me, I wouldn't bother having an AMEX card even if they would approve me for one.
It doesn't surprise me that AMEX was the first to attack you! It appears to me (with nothing to back up my next statement) that AMEX is among the most conservative of issuers. I have seen, on this board, people get approved for monster limits on visa and denied by AMEX. I think my first mistake with them was assuming that life could continue on as it always had with AMEX. When they called me on CHRISTMAS DAY, from collections, and said I had a THREE day past due balance of $1.79, I should have known that things had taken a turn for the worst. I had paid the bill less a refund that was going to be in before the statement closed. Sure enough, the refund posted, less the difference in sales tax of $1.79 between NY and TX. It was an error on the part of the merchant, but I ended up in collections. I paid the $1.79, which was 3 days past due, on Christmas Day, over the phone. I just don't trust them anymore. Hearing your story of your brother's trials and tribulations followed right along with what I have experienced. I have pretty much made my decision. I don't need them anymore. I pay them $130 per year and can't use the card. What sense does that make? If my experience holds, your brother should be cancelled right after he pays off his card. That is what happened to me. Thus the title of the thread....I paid off all my debt, I think I screwed up!
