Protect Yourself Against Reduced Credit Limits

Comments (scroll down to add your own):

1. AmEx without warning or reason just cut my credit limit in half - I have been doing business with them since 1992

   Comment by Buckwheat — Oct 11th 2008 @ 2:44 am

2. AMEX also cut my credit limit, I have been with them for 5 years! No notice, supposedly a letter is on the way, even though an email would have been better.

   Comment by lotions22 — Oct 21st 2008 @ 1:09 am

3. AMEX just did that to me too and I’ve been trying to get a hold of them all day but I’ve just been put on hold for a really really ridiculously long time. But i did get an e-mail. I just want to make sure they don’t charge me with an overdraft fee or anything.

   Comment by esther — Oct 22nd 2008 @ 5:08 pm

4. Since July, AMEX has cut my limit from over $8000 to $1300 - all the while I’ve been paying down my cards to increase available credit to increase my credit score. How can I get my score up if the card companies keep doing this?

   Comment by Bronwyn Mindlin — Oct 30th 2008 @ 2:47 pm

5. They reduced mine from 1500 to 900 without warning. I went to get gas and my card was not accepted. I was stuck. I called them and said I would cancel my card and notify anyone else with American Express cards to do the same. They are a terrible company

   Comment by Tom — Nov 1st 2008 @ 1:46 pm

6. Actually Amex this past week, cut roughly 70% of all cardholders with credit lines. Most were cut 95% of their previous lines. One of my 5 cards got wacked from 10K to $1,000. Many had higher lines and even were dropped to $500 to $1,500. Even the “No-Pre Set cards, gold, platinum” tehcnially now have a limit, if you were to call and ask they would tell you what would be the highest level a charge would go through at.

   More importantly they did this to reduce risk but targeted high end spenders even with FICO’s near 800, and with good payment history etc, like I.

   These reductions were not done for the typical reasons why a card would drop a members credit line like misses, late non payments, over credit line limts etc.

   One of the many real reasons used here is, cards were flagged for spends at Costco, BJ’s, Target, Wal-Mart, and Best Buy. If there were charges from these members at any of these stores, the geniuses at AMEX legal and probably Finance thought these were considered low income shopping establishments. (all i know is i can’t get out of a BJ’s or Costco for less then $400, and if my wife shops with me forget it, $500-600 easily)Not sure on the logic they used, but this was one of two large issues. The second was if they compared zip codes to demographic areas that have been hurt by the housing market. Using these 2 factors they assumed money is tight and members cannot afford to repay charges. So to mitigate risk they dropped as I stated nearly 70% of the cardholders nationally, and each line was dropped around 90% of the prior limit.

   If you were not signed up for Email notofication(alersts etc), then a letter would arrive in the mail. The basic BS is what is listed on the letter, not what I explained above. Due to the sudden change there are many people who found themselves bouncing promo checks they had received in the mail, over limit fees, or cards being rejected to make a purchase.

   Also when you call in, you are automatically routed after you enter your info into the IVR system to a “new group” they created to deal with this. Adverse Actions group, not normal care. They say you cannot try to increase your line for 90 days. They are essentially just fielding calls, and not clogging up customer care. Don’t bother calling, as they cannot do anything, and feel as bad about taking the call as you do making it.
   (probably a new call center just opened and they don’t even work for AMEX)

   This will have a ripple with Costco directly since you can only use AMEX at Costco. Would not be surprised if they open up finally to VISA, MC, DISC, etc.

   This action will now result in a damaged FICO score for many, and the possibility that other cards might see this change ion debt to available credit with AMEX and choose that maybe they know something and will follow suit and also drop their card members limit.

   This can spread and have a very negative affect during this crisis, and hurt consumer confidence, along with the inability to actually borrow from banks now that the FED and gov’t has stepped in. Since FICO’s might get dinged 50-100 points depending on what affects AMEX causes a consumer, it could impact the ability to actually get a loan from a lender of any kind.

   Also many small business card holders will now not be able to leverage credit to buy product resulting in yet another factor to slow the economy.

   Frankly, there should and probably will be two major impacts:
   1. Class action lawsuit filed with a top firm with I would bet hundreds of thousands of card holders that were and will be affected by this.
   2. Experian, Equifax, and TransUnion come up with some type of code or way to flag accounts of consumers that are being affected by this and to not include this (business driven change because AMEX has no deposit businesslike Citi, Chase, Wachovia, etc), and is going through major financial issues, such as layoffs, and resignations)

   This also will have a global and certainly domestic impact, and I am surprised between Costco, small business owners and the possibly millions of cardholders that have been affected by this the gov’t or other agency has not stepped in and done something yet.

   The most logical reason is many people are hesitant to discuss these sensitive topics, because most people regard money as off limits to talk about and are uncomfortable about it. That is the Psychy that probably has led many people to this decline. Had they only asked for help sooner.

   Comment by Dave — Nov 1st 2008 @ 3:39 pm

7. I absolutely hate AMEX and will never get another card with them again. I had a Gold card and a Blue card with them up until a few months ago. I had not used my Gold card in about eight months and I typically only used it to buy tickets to events or one-time big purchases. Last August, I spent about $1,000, which had never been a problem before (I had been a Gold card customer for over 10 years), and the calls started immediately requesting that I pay off the card. They called me every day for three weeks until I finally just made the payment online to get them off my back. And all of this happened even BEFORE I RECEIVED THE STATEMENT/BILL. I cancelled that card right afterwards because they were so abusive to me on the phone and I never wanted to do business with them again.

   The Blue card had a pretty low balance (about $2000) and over the past year they lowered my available credit first from $10,000 to $5,000 and then to $4,000 and $3,000… and I haven’t checked today to see what the credit limit is, but I am sure it’s right around the current balance. I should mention that I have never had a late payment with them BUT my husband’s business account has suffered, so I am sure I am being penalized because of my association with him.

   They are a horrible, horrible company and my one big lesson in all of this is to never use credit again. I am going to a cash-only basis forever more. I never want to be at the mercy of these vultures again.

   Comment by Susan — Nov 1st 2008 @ 9:37 pm

8. I have Bank of America and my credit limit keeps going up. They recently raised my limit. Overall, the limit increases by about 10-20% every 6-12 months.

   Comment by Mike — Nov 3rd 2008 @ 8:46 pm

9. My husband just received a letter today that stated his credit limit on his Wal-Mart Discover card was reduced from $3000 to $1190.

   Comment by Everafter — Nov 19th 2008 @ 8:00 pm

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