Hi, Can someone tell me if it's ethical for a CC company to drop your credit line $4000 BELOW your present balance and then charge overlimit charges??? -Sal
Yeah George that was my feeling exactly. American Express Optima did that to me about 2 years ago - they dropped my credit line from $6000 to $1500 nevermind the fact that I had a BALANCE of $5500 - I've been paying a late fee ever since. -Sal
usually in your cardmember agreement they reserve the right to decrease you credit limit and/or close your account at anytime.. I would have told them to buggar off and closed the card and transfer the balance... kev
They can CLOSE the account to ADDITIONAL CHARGES...but NOT make your credit limit LOWER than your balance so they can COLLECT OVER-LIMIT FEES!!!
Thats exactly what they did George. Keep in mind this account has never been late for 12 years but I had other credit issues. What would you do?
Save your dime - and your attorney's time. It's legal - as stated previously - it's in the card agreement. They can raise or lower your credit limit at any time. They can raise of lower your interest rate at any time. You agree to pay all fees and charges incurred - including overlimit fees if you are now over the assigned limit. Fleet - for one - can impose a "closed account" APR of 26.9% if you or they close it. The moral of the story is -- always have the means (cash to pay off) or available credit to make a fast xfer if you have to. -mj
That is outrageous!! I would file complaints with every agency I could think of. Whhat total BS. How could anyone justify that as a response to having "other credit issues." Sounds as bad as tha Household crap we are reading about. Try going to the media - they hate bad publicity.
mj, that would F*** up your available credit in one fell swoop, ya know? Just a reminder not to ever consider these guys our "friends."
??? My point was to always have an out - either have the cash to pay it off or another line to tap. NEVER be at the mercy of the lender. That won't screw up your credit as much as a trade reporting $5000 CL with a balance of $6500 (I think... then again, FICO is a big mystery to us all!) I'm with 'ya - they are NOT our friends ... it's all business. Take care of #1. -mj
Yeah, I knew what you were saying, but if I suddenly have an over-limit like that show up on my credit report, there ain't no company gonna take the transfer. They will all go to the default account terms immediately - they're always watching. The "back door out" would be slammed shut. If someone has the cash to pay it off, why would they be carrying much of a balance and paying interest on it?
Well, I am not a lawyer and I don't know the law from a hole in the ground, so take these thoughts of mine with a grain of salt, but... Even though it seems to be technically legal for them to reduce your credit limit at any time, it seems to me as though there must be some restrictions that would apply. Otherwise, what would prevent unethical companies from doing this on a regular basis in order to collect unjustified fees? Since an over-the-limit charge is a "punitive" charge, much like the NSF charges assessed by banks, it would seem as though a person would have to *voluntarily* go over their limit in order to justify an over-the-limit charge. Even banks have to refund NSF charges that result from their decision to place a hold on funds that are deposited. This is because they aren't allowed to "punish" you when they themselves created the non-sufficient funds situation; to do so would be "unjust enrichment", i.e. they'd be enriching themselves by collecting money that isn't legitimately due them because the customer did not actually violate any rules. It would seem to me that a similar rule must be in place somewhere with regard to credit cards. I dunno; if it were me I would go ahead and consult an attorney.
Well said BusyBee. There MUST be something in place where the company can't continuosly charge late fees b/c THEY lowered the limit. Totally different than if YOU went over limit and certainly distinct from being ABLE to lower the limit.
BusyBee...are you serious that a bank can't legally bounce you if they put the hold on your funds?!? This happened to me about 3 years ago to the tune of about $800 in NSF and merchant fees and damn near broke me in the bargain. I was furious but the bank kept saying "So sorry but since that last check you deposited bounced we have to hold these replacement funds for 10 days...blah...blah...blah" I wish I had known that they were screwing me then I would have sued.
Well, it may be different if their reason for holding the funds was because you'd recently deposited a check that bounced. I guess to some degree, then, they could say that it was partly your own doing. If they just hold them because, for expamle, it's a large amount or for some other reason that you wouldn't necessarily have been expected to foresee, then they do refund you for NSF fees that were for checks you wrote before you were notified of the hold. So, if they told you right at the counter that they were going to hold the funds, and you wrote checks against them anyway, then they won't refund anything. If they notify you by mail, though, then they will refund the NSF charges that resulted from checks you wrote before you could reasonably have known about the hold. You do have to call the bank and address each check, though, which makes sense because you have to be able to show that it's at least *likely* you wrote that check before you were notified (if they sent their letter on 8/20 and your the NSF happened on 9/02, you're probably not going to get a refund). At least that's how it is here in Arizona. I've had it happen.
Everyone, thanks for replying, Ok Here's some history - I have had a relationship with American Expresss for about 12 years now and have both the gold amex charge card and the platinum optima card ($6500 limit). From day one to this day I have never been one day late on either accounts. But with that said, I got into serious financial problems around late 1999 and defaulted on a few credit cards and other credit obligations ALL EXCEPT AMEX, I made sure I payed them on time even if it meant going without food some days (I wanted to keep these accounts) Well amex of course did the usual account review (pulling a soft inquiry) and saw all the problems I was having on OTHER account on my reports. So amex all of a sudden dropped my Optima CL from $6500 to $1000. I of course had a balance on the optima of about $6000 at the time and was instantly over my limit to the tune of $5000. So for the better part of two years I've been paying $39 over limit fees. HOW DO THESE PEOPLE SLEEP AT NIGHTS? So I'm sure all of you are wondering why am I so foolish to pay this every month. I was thinking ahead and was positive I would at some point be financially back on track and would definantely need those trade lines - well I am back on track. So what would you do if you were in my sitiuation right now? Should I planet feedback them and see what they say? Should I tell them to close the account (I don't really see how this would though) Anyone have some suggestions. P.S. I spend about $3000 a month on the gold charge card. Thanks, Sal
BusyBee- I am in Arizona as well. In fact it was Desert Schools Federal Credit Union that did that to me and the reason they held the check was because my paycheck from the State Ballet (Ballet Arizona) had bounced a week prior. This bounce created several NSF's on my account and a very negative balance. When the President of the Ballet's Board of Directors gave me a personal check to cover my bounced paycheck DSFCU insisted on holding it until it cleared (about 10 days) before they honored any of my old outstanding checks. It was a mess that I had no part in creating but I was punished nevertheless. I wrote a letter pleading my case to the upper management at DSFCU but they didn't respond. They didn't even care that the Executive Director of Ballet Arizona sent a letter to them on my behalf (and all their other employees who banked there) explaining what had happened to our payroll checks and imploring them not to penalize us for the subsequent bounces on our accounts. It is because of this that I will never do business with DSFCU again. I really think they suck.
I am glad I closed recently two accounts with AMEX and after reading this story I am 100% sure they will NEVER EVER get my business again.
