I hope American Express shrivels up and dies
So I got an email from American Express today. It's the second one in two months where they tell me (without providing a reason) that I'm going to get a spending limit decrease.
When I called American Express for the second time to explain why that's a bad idea (it will destroy my debt to credit ratio, which will destroy my credit score, which will cause an interest rate hike on my Visa, which means I can't spend any more money with Am Ex, which means they'll be losing money on me over time - especially when I pay off and close the darn account) I was told that I wasn't alone. In fact (according to the lady I spoke with), eighty-nine percent of cardholders have received similar limit reductions including my service representative (who claimed to have had 4 AmEx cards since 1991) and her supervisor.
Does anyone else see this as corporate suicide? I don't run a large balance, I always pay my card on time and as close to "in full" as I can each month. Why would they choke off the source of reliable revenue they have in me when I have steady employment (I have tenure...how much steadier can you get in this economy?).
As I watched Congress grill the execs from the Big 3 yesterday, I couldn't help but wonder, "why aren't financial companies getting the same public grilling for poor business practices?" And I don't mean the yahoos who created the real estate mess, I mean the yahoos who are running the credit card system in a bassakwards way. How can they hope to stay in business when they 1) issue cards to people who don't have money to repay, 2) charge those same poor people insane interest rates so they really can't ever pay, and 3) punish the customers who HAVE means and HAVE been responsible with higher rates and decreased limits which makes it harder to be a good customer?
The evidence of this stupid view on customer service is evident in the increase of delinquencies they've experienced in the past few months: http://www.bloomberg.com/apps/news?pid=20601103&sid=a.SS7_usmSqk&refer=us
Forget reliable and responsible corporate policy. Instead, keep giving away money to stupid causes (or at least causes that aren't really necessary just now), and make your loyal customers PRAY for you to go out of business.
Here's the plan for them to get away with maintaining their boneheaded operation: Become a bank holding company so they can get a chunk of the free money Congress is handing out. That way they can dump on their customers and still enjoy business as usual.
I'll bet AmEx executives are still enjoying THEIR private fleet of jets because no one has been grilling them on their shoddy business model.
So, here's what I plan to do: pay off the card and never use it. I reap the benefits of available credit and they do not get another penny from me. I don't care about offers of low rates, miles, whatever. Screw them. I hope they all go out of business.
Moreover, I'm writing letters to my legislative reps demanding that they call AmEX on the carpet for this mess. If that 89% number is correct, then clearly I'm not the only one dealing with this. I can afford to pay the balance on my card quickly, but this will definitely put an unnecessary squeeze on families who CAN'T pay it off quickly, and use their cards to make it to the next payday. This is insane, and if they expect to get their hands on bailout cash, it should come with an opening of their books and minimum customer service standards.
Anyone else have this problem or ideas on how to deal with it?? I swear I've never felt so angry or powerless as I did while that rep spent ten minutes tell me about how AmEx screwed HER over...
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The trouble is the Macro-Egos Micro-Brains running these companies think they have the right to shit on everyone else. How else can you explain the legalized loan sharking permitted by the Comptroller of the Currency?
IMHO, the whole business of credit ratings are a scam. You have indicated that this action on their part will destroy your credit score -- Even though no action on your part played a role in this. Isn't the whole idea of a credit score to alert which customers will repay their debts? Given the number of defaults, it appears that they got it all wrong.
My solution is to play by the big money boys' own rules. Borrow as much as you can -- run up your debts. And then refuse to pay them back. After all, that's how these guys operate!
If everyone did this, the whole credit card scam would collapse.
November 20, 2008 2:46 PM | Reply | Permalink
That's why it is collapsing. A lot of people have been living on that philosophy for a long time.
November 20, 2008 10:46 PM | Reply | Permalink
Ah, you are right, but... gee, have you ever stood in line at an American Express office in some strange corner of the world where you don't speak a word of the language, hungry and dirty waiting for a check from home?
November 20, 2008 3:04 PM | Reply | Permalink
Welcome to the global financial crisis and recession. You are now experiencing what small business has already been encoutering for a couple months now. Lenders have no trust in anyone. They no longer trust any past data on trustworthiness. They also foresee lots of people losing their jobs, businesses or having their income lowered in other ways, and they don't know how to tell which people asking to borrow that will happen to, so they are applying high risk to every borrower.
November 20, 2008 3:15 PM | Reply | Permalink
If they trust no one, then they are already out of business!
Why would anyone still have an AmEx card anyway when there are so many cards that do not have an annual fee and are accepted in more places. I travel the world with a Sears Mastercard and I get gift cards regularly for all my purchases. I pay in full and seldom carry any cash.
November 20, 2008 3:22 PM | Reply | Permalink
If they trust no one, then they are already out of business!
Could be! Think maybe that's why economist types keep mentioning the word "depression"?
there are so many cards
Oh boy. Watch for those inserts in your bills for all those other cards about their change in terms, and check the bottom of the bill thereafter for your downward change in credit limit.
And don't just watch the credit cos., we even got one from an AT&T business account yesterday which basically said: "from now on, you agree that you no longer have any rights at all."
November 20, 2008 3:31 PM | Reply | Permalink
Pay off your AmEx and then CANCEL it. Hanging onto a credit card you rarely use might subject you to "low balance" charges or "inactivity" fees. Keeping the card suggests you're okay with the decrease in your credit limit. If you're happy with VISA or MasterCard, use those judiciously.
November 20, 2008 3:36 PM | Reply | Permalink
I knew about inactivity fees, but "low balance charges?" Are you serious??? They keep forcing my balance lower and then they'll punish me for it?
Wait...I really shouldn't be surprised by this, should I?
November 21, 2008 12:12 AM | Reply | Permalink
This isn't something AmEx wanted to do, I assure you.
They had to lower people's credit lines to get their own capital to debt ratio back in line.
Welcome to the wonderful world of deleveraging.
November 20, 2008 5:31 PM | Reply | Permalink
It's funny you say that...I left out the part of the conversation where the AmEx rep called me "lucky." She said, all they did was lower your limit - most people had their cards yanked altogether.
Yeah, I'll probably pay it off and cut it up the day before the inactivity fees kick in...
November 21, 2008 12:11 AM | Reply | Permalink
I just think it's funny that everyone wants this company to die but lets save the auto industry because they are angels. I become more and more independant each day.
November 21, 2008 2:57 AM | Reply | Permalink
Red herring! I'm not friendly with the auto companies...but, you know, one cause at a time.
November 24, 2008 1:06 AM | Reply | Permalink
I've got a better story as it is about APR and not a credit limit:
Got a letter from MasterCard today. They told me they are going to *triple* my APR from 10% to 30%.
Did you see that APR??? *30%*!!!!
I called to complain. Turns out, MasterCard agrees that my credit is clean, no balance ever due, card used monthly.
But there is nothing they could do... my only choice: opt out. Here's the catch: By law, they have to allow me to finish up using the card (e.g. the original contract is good to the expiration date and they must honor that). If I opt out, on my expiration date, they will cancel my card unless I agree to the highway robbery terms (e.g. opt back in).
So I told them I opt out. My expiration comes in about 3 years, and I won't worry until then. Of course, should the account be closed, it will lower my FICO.
They have you coming and going. I'm betting in 3 years, MasterCard may be out of business anyway. ;-)
November 21, 2008 6:09 AM | Reply | Permalink
My only suggestion (very hard for many) is to pay off the balance every single month. Then it doesn't matter what the APR is, and you are effectively getting a one month, interest-free loan, and thereby sticking it to these bastards.
Try very hard not to buy what you can't afford, and if you need something that you can't afford, get a bank loan for it, charge it on your credit card so you will get "points" and then pay that sucker off before you have paid a penny to the credit card company in interest.
Places like Best Buy will give you several months of interest-free credit for purchases over a certain amount. The trick is to divide the total by the number of months you have and BE ABSOLUTELY POSITIVE TO PAY IT OFF BEFORE THE LAST DUE DATE or you will owe a hefty interest on the total amount. Never pay anything late, either. I just got a new MacBook from Best Buy and by paying them $75 a month, it will be paid off before my free credit expires. That is a pretty painless way to buy a computer, no?
So basically -- game the system and never pay anything off late!
November 21, 2008 11:16 AM | Reply | Permalink
Amen, brother. American Express and I had a bitter parting of the ways earlier this year. I won't go into details, but I was a 20-year "cardmember" (oh how I've grown to hate that euphemism) who had never missed a payment in all that time. A spotless record with them.
But, as a small business owner, I had run up more debt that I was comfortable with, so I entered into a DMP (debt management plan) to help me pay it off on a regular schedule. AmEx flat out refused to participate in the plan, and because I missed ONE payment while the plan was being set up (and while they were in the process of refusing to participate), they turned me over to a collection agency. Just like that. "Twenty year customer? Screw you."
So now I'm paying it off through the collector instead of directly to them. My credit is still very good (I monitor it), so that's fine if that's what they want. But the cherry on top -- a month or two ago, they reduced the credit line on the card to BELOW the remaining balance, so that allowed them to ding me for an over-limit fee. On a card I haven't used in a year.
Oh yes, American Express is Satan.
November 21, 2008 12:15 PM | Reply | Permalink
"So, here's what I plan to do: pay off the card and never use it."
That's what they're trying to get you to do. They want the people who carry a balance to pay interest, and they're willing to lose your business to do it.
November 21, 2008 12:18 PM | Reply | Permalink
We are a Merchant for AMEX and, we also have alot of friends that are in business for themselves, one owning a bank. He has also had American Express do the same thing. WE HAVE BEEN TRYING TO GET PAID FROM AMEX for a COUPLE OF CHARGES WE CHARGED 2 MONTHS AGO!(over $2000) I even called the clients of the charged cards and they say they have already been charged and paid! AMEX has excuses of clerical error every time I call. Anyone know who to contact about this. AMEX always wants another week to fix it. I'M SICK OF IT!! They wouldn't put up with this!
December 7, 2008 6:01 AM | Reply | Permalink
Burned out - just stop your bitching and cancel your account!! How about that. The banks are overextended and need to ratchet back. There's a lot of consumers who went hog wild borrowing money.
Stop your whining and find a bank that meets your needs
December 18, 2008 10:29 PM | Reply | Permalink