American Express Caused a Domino Effect on my Life

I empatize with you. AMEX is still at it. They like to drop the limit
in stealth and so close to the limit that you are likely to go over
it. Then they can charge you fees and higher interest rates.

AMEX is in financial trouble and has figured they can get a lot of
fees out of customers. The execs are laughing all the way to their
banks as they gets bonuses for this. I've had good experience with
AMEX for over 10 years so they must be getting really desperate.

Richard Vance\
Huntsville, AL

I recently had a very similar with American Express. I've used their
card and made payments ontime religiously for almost two years. In
February 2008 my wife and I were celebrating Valentines Day dinner.
Two days before Valentine's I checked my acount details online and I
had a credit limit of $8000 with a balance of $3900. On Valentine's
day, I attempted to used the card at a restaurant and the bill was
about $250. The server came back stating that the card was declined. I
was surprised! To my knowledge I had over $4000 left in credit with
American Express. The next day I called Amercian Express to find out
what happened, and after being transferred three times, I was finally
told that my limit was reduced because of a report provided by
Experian. I was shocked and upset that I was not notified of the
credit limit reduction. The AMEX representatives said they could not
do anything. I would have to contact Experian to fix the issue. After
weeks of disputing with Experian, my case is still under
investigation, and my AMEX card balance is close to 90% to limit
instead of the 50% it should be at. This is hurting my credit score.
What a horrible situation that a company like American Express would
do to it's customers; arbitrarily reducing their limit without
explanation or policy is unethical in my opinion.

Even if they reinstate your original limit it is still not going to
automatically put your credit score back to what it was.

Unfortunately it is common practice for companies to automatically
decrease your credit line if something negative pops up on your credit
reports.

Credit card companies like to keep people in debt...but they do frown
on people who consistently are late or no pay on their bills.
"...they finally were able to figure out that my credit limit had been
dropped automatically, on a Saturday, from the $13,000 to $3400."
What I did not see was the reason A.E. gave you for doing this after
they gave you the dropped credit limit.

"We are in the midst of purchasing a home, selling ours, consolidating
some debt...". Do you think that when all of this was run through your
credit it caused a breakdown somewhere along the line. Either that or
late/no payments can also be the problem.

Let us know if they ever put you back into the $10,000 bracket
again...it will be interesting to find out why this happened also.

You said this happened "a month or so ago" from this letter dated
11/20. That makes it approzimately 10/20. FWIW, I don't understand
why you didn't post the exact date this event happened, because you
must know it and it is important to your complaint.

Now, in a reply below dated 11/21, you said that you received the
first written notice regarding your credit limit reduction on the same
day (11/21).

This means it took a month to tell you your credit limit was reduced.
This seems unreasonable, unless something was lost in the mail. Have
you called and discussed the fact you received no notice for a month?

Get to the bottom as to why your credit was dropped. I agree. Talk to
Experian and American Express. After that, stop using your credit
cards as a source of money. Stop purchasing birthday gifts on credit
cards. Use cash, if you don't have it, then that means you can't
afford it. If you buy it anyway, then you are living beyond your
means.

Anytime someone has too consolidate bills, they have financial
problems. And unfortunantly financial problems (unless due to some
unforseen medical bills) are due to poor money management and/or the
financially ineptitude. Point Blank. I don't mean it as an insult,
it's just that there are people who think because they have 20,000 in
credit, that somehow is equivalent to having that amount of money in
the bank. American Express can really do what they like, it's their
money. I'm sure if you read the fine print, it will tell you that, in
short , you are at their whim. People should have ONE credit card and
preferable with the company they bank with. Do all your business if
possible through your credit union/bank that is includes mortgages,
car.
Did you say you put an entire purchase of a car on a credit card???
wow. That is crazy. (just my opinion). the limit should be an amount
you can pay off. Ideally you should only use credit cards because you
don't want to write a check with all your personal info, or want to
have an official record, special credit card incentives (life frequent
flier) or some consumer protection issue. Never should be used
because you don't have that amount available to you in the bank. If
you habitually use a credit card because you don't have the money
right then but will have it 'next week' or next payday you are not
being financially smart. Use the card, don't let the card use you.
I'm not schooling you, I am just putting it out there for whoever
feels like the shoe fits. I feel bad for you and your situation, I
really do, but all in all it's their money and you just borrow. So
they basically own you, until you get rid of that card for good.

Something is amiss here if lowering a credit card limit causes a 40
point drop in a FICO score. The ONLY way that could happen is if you
had almost no other sources of credit so your entire report made it
appear as though you were greater than 90% overall utilization. Going
over 90% utilization on one card will certainly drop your FICO, but
not by 40 points.

There is also something going on here beyond too many report
inquiries. I have about 150k in credit lines spread across 6 AMEX
cards (4 personal, 2 business) and have had them for years. At some
points in time I have had up to 10 inquiries on my reports - and I
have never had a credit limit lowered. And before anyone tries, I
carry no credit card debt - not even at 0%.

And I'm sure I'll be screamed at by the OP for saying this, but you
should know that it makes absolutely no sense* to roll unsecured debt
into secured debt**. Even with a score of 680 you could refinance your
current debt to a rate lower than your mortgage, and it would remain
unsecured.

*It makes a tiny bit more sense if you happen to live in a no recourse
state like California, but even then you could still just refinance
the debt with 0% credit cards.
**I am assuming it is currently non-secure debt, if its already
secured then it doesn't matter.

My friend had this happen, but it was not becuase of bad credit
issues. She had stopped using her Blue card, that yes does have a
balance each month, and so AMEX lowered her spending limit. She
really didnt care one way or the other. She had paid it off and was
keeping it for just in case. She has 2 other AMEX that do have to be
paid off each month and has not had a problem with those, however, she
has the best credit on the planet.

I guess I would be highly ticked also if this happend to me. But I am
so worrisome that I am forever checking my balances so I think I would
have noticed right away, and I also have a habit of checking my
avalable funds before I leave home so I know how much money I
have...but again I am a worry wort.

Wow that's some bull right there. I highly doubt they will answer your
letter though. They simply don't care. But at least you have convinced
one potential customer to never use them. I was just fishing around
for another credit card and will definitely be avoiding American
Express. Thanks for the heads up.

If so, was it before you made this purchase?

"After a while of being batted around on the phone with the
representative, they finally were able to figure out that my credit
limit had been dropped automatically, on a Saturday, from the $13,000
to $3400."



Please do elaborate on how you were "batted around". Do you mean that
you didn't get the answer within 5 seconds or so of calling? Sometimes
it does take time to get to the bottom of things like this and for
them to figure out what happened. Had you ever been on the other end
of the phone you'd understand, and not use silly terms like this in an
otherwise respectable letter.

I gotta agree w/ the fire eater on this one! They should have at least
sent him some sort of written notice that they were reducing his
limits. I think this whole situation probably could have been handled
by both parties better, but I think that Amex really has poor customer
service, and so that is why I side w/ William on this one.

I really didn't think that I would have this large of a response to my
little Target/AM EX issue, but there are some seriously judgemental
people out there. We have some serious debt, I admit. Most of which
comes from legal bills (my step-daughter's father keeps taking us to
court, but that is another story) and the attorney does take credit
cards. I'm not out buying Gucci shoes or anything of the sort.
Sorry, to those of you who want to crucify me for having debt. So,
there is some of the rest of the story. I didn't realize I needed to
detail where I purchased my last toilet paper roll to you people. My
letter was in frustration over the lack of courtesy on behalf of the
AM EX company and Experian to let me know of this reduction in credit,
BEFORE I made a purchase and incur more costs (i.e. over limit
charges). I have never once been late on a bill, I have never once
incurred an over limit charge and I am a very responsible person with
my credit. I watch it quite closely, for those who claim I should
have known. Purchasing a home, using the equity from my current home,
paying off ALL my bills, except my recurring utility and such would
render me debt free - except for my mortgage of my new home. I, for
one, think that is a very positive step and quite an accomplishment.
So, I am sorry if some of you feel the need to kick someone, or are so
jaded that you feel 'there must be more to the story'. This has made
a significant impact on our purchase of a new home via the credit
problem. But we are working on it, and hope to have it resolved soon.
Thanks, for the others who understand, support. And FYI, AM EX Blue
has a credit limit, I have never had a Gold AM EX card, I don't see
the point in having an annual fee for cards that you get free. I am a
firefighter, not the CEO of an oil company.

This does happen. I have a friend that has six inquires on her report
because of an auto dealer trying to get her the best loan.

This does happen. I have a friend that has six inquires on her report
because of an auto dealer trying to get her the best loan.

I just had a similar experience. Washington Mutual just lowered my
credit card limit because of "too many inquiries" on my credit report.
I just purchased a house a couple of months ago, and the multiple
inquiries are because I shopped around for the best rate on a
mortgage. I agree with you, it's totally lame. We have 3 credit
cards with Wamu, as well as multiple checking and savings accounts. I
am now in the process of transferring all of my credit and banking
accounts to financial institutions other than Wamu. They may not care
about losing me as a customer, but it makes me feel better that I am
not giving them any more of my business.

This sucks but it happens. My best advice is to FREEZE Experian.

Experian won't remove inquiries without a fight. Even if they are not
yours. They don't care. FREEZE THEM!

Transunion and Equifax on the other hand will delete inquiries left
and right. You won't ever have a problem like this again.

I recently learned that a credit card company CAN raise your rates if
you are late paying another credit card company! It's hidden in the
cardholder agreement.

We have regular poster here who is an "expert" at manipulating credit
scores. It just involves a bit of daily discipline on your part.
Perhaps he'll chime in and tell you how it works. But, he may be too
busy putting together a class action suit of some sort. Or, with the
busy shopping season, he may be returning some Target merchandise to
WalMart.

I could be wrong, but everything I've found about the American Express
Blue card indicates that there is no "pre-set spending limit" - -
"purchases are approved based on credit record, account history, and
personal resources." So it appears that perhaps the OP tried to make
a purchase shortly after a routine review was done on his account of
which the multiple inquiries and possible balances on other accounts
prompted Amex to lower his credit limit.

I've had an American Express card for 27 years. There is no credit
ceiling on Amex cards. It's unlimited because you HAVE to pay it off
in full each month. It's not like Visa or Mastercard. So this
doesn't add up. I'm pretty sure there is way more to the story than
the poster is copping to. There has to be. And for the record, this
is NOT how people get into trouble with credit. You get into trouble
with credit because you spend more than you make, extend yourselves
way beyond your debt limit, and then when your creditors and lenders
see that and say politely, "no, you can't have this loan, you're too
much in debt", it's your fault, not theirs. Now isn't it! Take
responsibility for your life and your actions. It works a lot easier
that way.

Peace!

perhaps...they lowered you credit limit because you had a high balance
and were continuously only paying the minimum amount due (even if it
was always on time). that is reason enough for a credit card company
to lower your limit. just a thought...and I agree that you are
writing to the wrong company. asking the same question over and over
again to AMEX just because you don't like the answers you are getting
isn't going to get you anywhere but where you presently are
standing...it's just wasting your time.

I worked with my bank a couple years ago to see what the best mortgage
we could get would be. My credit was good, but they urged me to cancel
a lot of cards that I had open with large balances that I didn't use.
They said they were looked at as "potential for debt trouble", i.e. I
could go max those cards out and be in trouble with my new mortgage.
My husband's student loan was also hurting us, so we decided to wait
until that was paid off as well. We closed many credit cards, and keep
one with a relatively small limit (6,000) that we pay off each month.
The credit card company has offered to raise the limit to 25K(!), but
we have asked them to keep it where it is. We don't need that much
available credit if we are trying to pay down our debt anyway! Our
credit score has since INCREASED. How do you explain that?

You scores may have increased due to the fact that cards you closed
were not that old. The average age of your accounts increased and so
did your score.

Canceling credit cards drops your FICO score. I learned the hard way.

n/t

"This is one of the reasons people get in such credit trouble. It is a
catch 22 they cannot get out of."

Wrong. Other than medical bills, the number one cause of too much
debt is OVERSPENDING: spending more than you make. It's just that
simple.

And you weren't going to be debt-free, as you claim: You'd still have
a mortgage. That's plenty of debt.

I'd say you have some impulse control issues with all your credit card
debt and other loans.

They have every right to do this. They can change your rate or credit
limit at any time. Take this lesson to stop living off credit. Pay
cash and have one less worry. If you play with snakes, you are going
to get bit.

Do you know that your credit score dropped from 720 to 680 because of
AmEx's decision to decrease your credit limit? Or are you merely
assuming that that's the reason that it used to be 720 and now it's
680? Is there any chance that your credit rating dropped and that's
what led AmEx to reduce your credit limit? Is there any chance that
both the decrease in your credit score and the decrease in your credit
limit are caused by some third thing?

I just have to say that every credit card bill I get shows your credit
line and how much available credit you have. Did you ever look at
yours?

I agree MA that we arent getting the whole story....

"We are in the midst of purchasing a home, selling ours, consolidating
some debt and paying off a large amount of outstanding loans. All of
which are coming in the same area of time. The domino effect that this
has caused, because of a negative on my credit score is probably going
to prevent me from getting the home loan,"


If this is all true then why, exactly, are you CHARGING thousands of
dollars at Target?! If you are in the process of trying to consolidate
debt and pay off large amounts of outstanding loans then you have no
business charging anything.

And my guess is that if you have large outstanding loans...that can
cause credit card companies to not want to have thousands of dollars
tied up with you.

Something isnt adding up...

You did this.

YOU forgot the gift card and then attempted to undo the transaction.

YOU were not aware of the balance on the card and the credit limit
(but just FYI, when a card declines, the cashier/employee is NEVER
told WHY, nor do they "help" the guest contact their creditor, so
right there, you are hindering your credibility with that little
"embellishment")

YOU were not paying attention to your credit report, nor did you
(apparently) read the terms of your credit agreement with AMEX. The
creditor may reduce or increase your credit limit, at any time and at
their discretion. The multiple inquiries you were making in the
process of purchasing and selling a house and "cleaning up your debt"
as you put it, appear to have caused them to reconsider your credit
worthiness.

I also get the impression there is more to this story than you're
telling. Most cards won't significantly drop an established limit
unless there is something severely derogatory on the report. And why
is your mortgage company orchestrating your financial planning? They
usually don't get into that.

Your real beef is not with Amex, it's with Experian for what they
posted to your report (but nonetheless, if you are doing all this
financial restructuring, it is YOUR responsibility to keep track of
what is there!).

Writing nasty letters to creditors won't get them to see it your way.
Credit is a game and you have to play by THEIR rules. Whether or not
you agree with or even like those rules is irrelevant.