Print

Please login or register.
1 Hour 1 Day 1 Week 1 Month Forever
Login with username, password and session length

[Flyingifr]

I am sure many of us have had credit lines cut recently. I have had 4 cards cut my limits so far and I have closed each of them. It amn amazed at the (dis)ingenious "reasons" they give for this action - trying to make it sound like it's something we did. Let's pool our collective experiences here so maybe some day this information can be presented somewhere it will do some good. I'll start.

American Express CLD'd me in November, giving the "times are tough" reason. The new, improved CL I had was about $200 more than my current balance at the time. Over the next 4 months I paid it down another $1000 without adding any new charged. They cut me again this month, again to about $200 more than I owed at the moment. At that time I figured out that Amex no longer wanted my business and I closed the account. Here are the reasons given (and the truth behind the "reason"

1. Your total debt is too high with American Express or other creditors.

My total debt is $50,000 lower than it was when you gave me the card, and $1000 less with Amex than it was 4 months ago. Now, all of a sudden, it's too high? In addition to the 19% on credit cards I owe $85,000 on my home and $4,000 in my car.

2. The balance on your American Express card is too high relative to your credit limit.

No kidding, after you reduced it twice in 4 months by almost 50%!!!!

3. The average amount of payments in relation to your overall balance on your American Express account(s) has been too low.

I have always paid more than the minimum payment you requested. If this was an issue, why not simply raise the minimum payment?

4. Too many creditors have recently reviewed your credit.

No kidding... including you every month. Like I have some control over that?

5. Your credit score as provided by TransUnion. According to TransUnion, your score is based on the following factors in your credit report:

5A. Proportion of balances to credit limits on bank/national or other revolving accounts is too high.

According to my TU credit report, my utilization is 19%

5B. Length of time revolving accounts have been established.

My oldest, Wells Fargo, is 6 years old, and has a $50,000 line.

5C. Length of time accounts have been established.

I don't know if this applies to the Wells Fargo account being my oldest at 6 years or their account at 1 year.

5D. Time since most recent account opening is too short.

Yeah - 1 year - it was YOUR account. Is Amex saying I should have has an open Amex account before they opened it? BTW, because of identity Theft committed against me 30 years ago, it took that long for me to even get an Amex account.

My other Amex account was closed for this reason:

6. Your spending patterns.

Like they would know my spending patterns. I never used that other account - not once. This account that I just closed this week was used only for a single BT and paying to the Amex Credit Secure credit monitoring service.

There you have it, kiddies - pure hogwash "reasons" to CLD. Let's hear from others.

[Mischievous Smurfy]

Wouldn't failure to spend be a spending habit?

[maylaur]

Habitual non-spending?  lol

[Kitten]

Wouldn't failure to spend be a spending habit?

That's the spending pattern that just cost me an Advanta card. I did a BT with it in 2006, paid it off in 2007, and never spent anything. The card was due to expire in a few months, so I WAS going to put it in my wallet to show some usage, but got the letter last week telling me it was closed.

BTW, has anybody else with a Discover biz card in a corporation's name suddenly found that card on their personal credit reports? It seems odd that they would do that to me after the card had been open for a few years. I'm tempted to dispute it as 'not mine', because the card belongs to a corporate entity. My Creditsecure FAKO score dropped ten points when it appeared. Can't figure that out, it's about the same age and credit limit as many of my other cards.

[Rottweiler]

My other Amex account was closed for this reason:

6. Your spending patterns.

Actually, they may well have meant "lack of spending" as Smurfy and maylaur pointed out.  Really:

After all, if all that account did was keep your socks company, AMEX may well have decided that their "exposure" was too great.  The reason for that might not be the second credit line per-se, but the fact that AMEX has NO idea of how the account would be used so rather than risk you using the second account to compensate for the CLD drop and then risk having your source(s) of income "disappear" into the Sonoran Desert sands and, as a result, get "hit" twice....

Your actual history with AMEX was irrelevant; the computer did not care and neither did Customer Service (after all, the latter is not being paid to THINK, are they?).

[Flyingifr]

My point exactly, Rotty - Amex decided they wanted my accounts gone and they manufactured any excuse they could think of to "justify" it. Facts were irrelevant.

My response was to beat them to the punch, believing that "close by consumer" looks better than 'closed by grantor" in a CRA file. It's like no-fault divorce - it one party says the marriage is over, it's over. I just find the excuses are reasons given to be less than ingenious.

[Rottweiler]

If you think it's bad that a creditor would cut the line to just above what you owe?  This story posted on "Smart Money.com" by reporter Kelli B.Grant last Wednesday--"How to Blow Your Credit Limit -- Without Spending"--shows it CAN get worse:

Under different circumstances, David Chaplin-Loebell wouldn’t have minded that American Express ... cut his unlimited credit line to just $5,000...when AmEx reduced his line in October, he had an outstanding balance of $10,000. “I found out by having a business purchase declined,” ...Chaplin-Loebell, who lives in Philadelphia, is now paying the balance under his regular card terms, and presumes the line will free up for new purchases once he’s below the limit. “For now, they’ve essentially frozen the account,” ...

Paul Pensabene of Saratoga Springs, N.Y., received a statement from HSBC on Dec. 8 that said he had a $359.99 balance and remaining available credit of $8,640. But when he went online to pay the bill several days later, his online account showed that same balance put him over his newly-reduced credit line of $300. And that didn't include the $35 over-limit fee. Pensabene grappled with customer service until they agreed to remove the fee, and then paid the balance in full. ...

Like, let's say, instant contract default.  Even if one never went over the credit limit and/or was ever even late with a payment. And, yes, it's as legal for the credit card companies to do this as to cut the line to just above what is owed:

[T]he practice of cutting credit lines below the balance is legal ... says Chi Chi Wu, a staff attorney for the National Consumer Law Center, a consumer advocacy group. Federal Reserve rules requiring lenders to give cardholders 45 days notice before reducing a credit line to the point that it would trigger penalties won't go into effect until July 2010. “[Until] then, there are no federal protections,”

Why would they do this?

One possibility is that this is yet another attempt by card issuers to get consumers to close their accounts (while bringing in a little fee income in the short term), says Dennis Moroney, research director and senior analyst for consulting firm Tower Group. “I can’t rationalize in my mind what other motivation there would be,”

This is still another incentive for consumers to give up and close the account but allow the credit card company to rake in still.more.fees while doing it.

One for Flying:  You were wondering why AMEX would close an account you did not even use? Spokeswoman Cindy Savio of HSBC (who have also tightened credit standards), quoted in that same story,  may have the answer for you:

“[I ]n an effort to reduce credit risk and refine strategies for our card business, we have tightened credit standards, reduced or canceled higher risk credit lines, and closed a number of inactive accounts,”

Your unacceptable to AMEX "usage pattern" (or rather "non-usage pattern") was sock-drawering the second card.
------------------------------------------------------------
Grant, Kelli B., "How to Blow Your Credit Limit--Without Spending", SmartMoney.com, March 11, 2009. Downloaded March 15, 2009. Available from http://www.smartmoney.com/spending/deals/card-issuers-will-not-hesitate-to-slash-your-credit-line/  .

[Flyingifr]

I guess Amex taught me - use the card for everything or we take it away. I still have over 4100K in lines with 19% utilization and they are none of it. They get no merchant fees from my usage of their card and no interest from me.

Yep, they sure taught me a lesson.

[itsmeagain]

Hmmmmm FOUR MILLION ONE HUNDRED THOUSAND in credit lines with 19% utilization?  That equals a total debt of SEVEN HUNDRED AND SEVENTY NINE THOUSAND DOLLARS.  Need someone to carry your bags? . . . 

[Flyingifr]

Sorry, it's $100K in lines - the "$" key sometimes sticks.

[Kitten]

Other AMEX games:

http://consumerist.com/2010/01/amex-sent-me-replacement-credit-card-with-0-limit.html

AmEx Sent Me Replacement Credit Card With $0 Limit
By Phil Villarreal on January 25, 2010 10:00 AM


Justin was thankful for helpful, on-the-spot service from American Express when his card was declined while traveling. The replacement card AmEx sent him was less than helpful, however, given its less than adequate limit.

He writes:

    “
    We checked into a hotel on a business trip with an Amex Open card that we hadn't used for a few months. It was declined, and a call to Amex got the response that there was plenty of credit available but the card had been reported stolen a few months ago. Odd, we hadn't done that, and so we checked to make sure there was no fraudulent activity (none). And being a top-service company, Amex overnighted a replacement card to our hotel so that we could pay our hotel bill. So far, so good.


    Imagine our surprise when we were packing our suitcases the next day to get an automated call from Amex letting us know they had slashed our credit limit to the current card balance, leaving us no available credit to pay for our hotel stay. Sure, they sent us a new card, but it was now useless. Amex insists that the account review was not triggered by our request for a replacement, but with only a handful of recurring charges on the account over the past few months, it would be a nearly impossible coincidence. In fact, it would have been better if they had simply not sent us a new card, as we would have had another business card overnighted from our office.

    I've been a happy Amex card member for more than 20 years, but this one has enraged me. Everyone should take note - do not rely solely on American Express when traveling. They just may leave you stranded.
”

Poor guy may as well have left home without it.