"AMEX Will HURT Your Credit!"

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Written by: cardholder on 2008-07-21

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cardholder's review: DO NOT apply for/accept the One card from American Express. My recent experience with this card has been terrible. Please learn from my mistakes!
Pros:
- 1% cashback on all purchases deposited into high yield savings account.
- "No Pre-Set spending limit"

Cons:
- High yield savings account does not have that competitive of a rate compared to ING, HSBC, etc. Currently 2.75% vs ING's 3% or HSBC's 3.5% (as of 7/21/08)
- $35 a year annual fee cancels out first $3500 worth in cash back
- It takes up to a week to withdraw money from the high yield savings account into a linked checking account.
- You can only make 6 withdrawals a month
- "No Pre Set spending limit" means AMEX does not report your limit on your credit report. This means that you can not request CLIs, and no matter what you do, using this card will make it appear that your utilization has increased.
- AMEX monitors your Experian credit report every 2 weeks, if it goes down, they will impose a limit on the card. In my case MUCH LOWER that my monthly average.
- This is one of the only AMEX credit cards that can not be converted/upgraded to other cards. Think Blue Cash looks like it would be a better fit, well, you'll have to open a new line of credit. You can never convert this card.

My Story:
I opened this account in 06. When I opened the account it had "No Pre Set Spending Limit." I asked the customer service rep what the real limit actually was, and they would not tell me. So in the beginning I was relatively cautious in my spending. I averaged about $1500 balance a month, which I paid in full EVERY SINGLE MONTH since I've had the card. Never late, ever. At the same time I have not had any late payments on any other cards / loans with other banks. The highest balance I ever had one month was $6000, which as usual I paid off at the end of the month.

This whole time I never heard a peep out of AMEX that I was spending too much or too little or doing anything other than being a loyal customer that was helping them make lots of money. Then just recently, I notice on my online banking screen that there where it once said "No Pre Set Spending Limit" next to my balance it now said "$300 credit remaining**". Naturally, I call the customer service number and am told that my credit score went down, and because of that a limit was imposed on my card. I told the rep that I routinely charge much more than the limit they imposed on the card every month, and pay it in full no problem. I let her know that the new limit they've imposed makes the card essentially useless to me. She transfers me to a supervisor who explains that because my Experian score went down, they no longer have faith in my ability to pay my balances. Even though I've had months where I used the card up to $6000, they set a limit of $1500. When I explained to them that I have over $40,000 in the attached high yield savings account, they say that does not matter and that since your score decreased there is nothing they can do to override the computer program.

Please remember, I never made a late payment on the AMEX card, or any other card. The customer service department and the company in general have treated my like a second class customer who has defaulted on their card or something. No amount of rational explanation had an effect on them, and I was talked down to as if I was crazy for being unhappy with my new limit.

So after all this, I looked up my Experian credit report, to find out the reason my score went down. Here is the kicker in all this. The decrease was because AMEX was never reporting my limit in the first place. Since I was using the card, but the limit was reported as $0, my overall utilization (debt to credit ratio) was completely messed up. Because of AMEX my credit report made it look like I was in over my head, even though I've been using credit responsibly for years. After months of this, it finally took it's toll on my report, and AMEX responded by imposing a limit that makes the card essentially useless to me.

Thanks a lot AMEX.

You've hurt my credit, blamed me for it, and treated me like crap. I'll never let you make another penny off me.

8 Comments

Comment 1 by kmoney
Good Grief on 2008-07-21

Now what are you going to do? Many people have been complaining about AMEX, you know AMEX use to be so attractive but not anymore. I don't need any cc dragging my credit score down because of their screwup. And to think they won't even say it is because of them. If this is not your oldest card I would definitely close it (that's just me). How old are your other cards if you don't mind me asking?
Comment 2 by kellbell
What A Joke! on 2008-07-21

What a joke! Bank of America has been known to do the same thing. Fooey!

Get rid of that stupid card!

Buh-bye!!!
Comment 3 by mrrob
Wow on 2008-07-21

So sorry this has happened to you. We have heard this same situation happen to many that are members of this site. Hope all works out for you
Comment 4 by cameron
Can It Be Other Factors on 2008-07-21

No Preset Limit permits one to spend for example 6000 this month and pay next month all, yet spend say 7000 next month to pay the month after. Which is better than say having credit limit of 10000 Amex cards with no preset limit report the balance Amex does have cards with credit limits too such as Starwood, Optima and few others But being able to pay your card in full consistently carries a lot of weight. Scores fluctuates few times a month but having ability to pay your bills on or before due date especially more than minimum preferably full boosts scores. Seem to be some other factors that has caused AMEX to be cautious. Is there some other debts to other providers, personal bank loan, car leasing or mortgage increase or decrease perhaps some unpaid that has caused score to decrease. Has personal income changed and personal debt increased. I've used Amex all my life in Europe and a die hard AMEX fan. In the US now I have 5 Amex cards 3 personal of which 1 is charge 1 starwood and 1 American Airlines I also have 2 corporate cards. I do have other cards too just I prefer AMEX since I get much of them. I see my scores go up even with so many inquiries this year. I am still puzzled when I read from many who had their issues with AMEX which makes me wonder if there is more to it that what is revealed.
Comment 5 by wildrage2
Scoring Systems on 2008-07-21

I blame the scoring systems just as much as I blame AMEX.

They should plan for cards like Amex when calculating your score.

It's all a bunch of BS.
Comment 6 by thomas1
AMEX on 2008-07-21

YEP!! I knew I would hear about this just like they did to me... I had Gold Amex for 12 years, paid in full ceiling of 14k, paid religiously each and every month on time. I got rid of it, took the rest ofmy business over to Citibank, got a very generous credit limit with benefits, and have been happy ever since.

You are right, it is Amexs' fault as well as FICO for not allowing the scoring system to pick up on these charge cards and calculate your score accordingly.

Dump them, Amex is getting worse and worse, and its only going to continue. So, for you Amex holders out there, be very careful as they are watching your every move. Lates, Utilities,Utilization, and collections. I think this economy has made them very nervous, and with the amount of accounts in default because of gas prices, etc. Everyone is charging like mad. It doesn't matter who you are with them, really never has, and won't in the future. Credit markets are really tightening up right now. As I've read several posts on this board, credit limits seem to be at a low..

Since they have already hurt your score, I would leave on the next bus out, and find another bank that will grow with you, such as Citibank. Just my opinion and preference.

Good Luck and Sorry this happened to you too!!!
Comment 7 by mark
Stay Away From AMEX! on 2008-07-21

AMEX did it again!

i heard stories from friends... Based on their own experience about decrease in credit limits without having the formality to inform the user that there was a DECREASE.

so if you are confident to charge that 300 purchase to your AMEX BLUE thinking you have $5,000 CL... Think again, better check your limit before you get denied, and embarrassed in the process..

the GLORY days for the American Express is long gone!

@ KellBell

I haven't heard about Bank of America doing this. Nor Chase.

one company, Citibank did this to another friend of mine.,

decreased the limit from $15,000 to $10,000..

the funny reason they gave her, based on their review her highest usage fro the card was just $3,000...( that's because she pays everything in full every month!) that's why, for them she doesn't deserve a huge amount of Credit!



we are all scratching our heads now, but if you all READ the fine print in the Membership agreement, you'll be shocked to find out that YES, they can do this, and they can even close your account right away without owing you any explanation at all..

so be very careful in carrying balances to your cards whether it's VISA/MC/AMEX or discover.
Comment 8 by rockin35
Other Factors Maybe??..... on 2008-07-23

Could there be some other factors that have influenced their decision. Was the credit score change a HUGE change that sparked this dramatic CL implementation? It doesn't seem fair for them to impose a CL after not having one for so long. If the Supervisor told you they did give you a credit line because of recent score changes, that would seem odd not unless they detected a huge score decrease or something. I cant say that this would be the only reason for the change.

Try to get more information... Rockin35!
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