@Sevenfeet wrote:A few days ago, something I was hoping wouldn't happen did. Amex gave me a crushing CLD, reducing my BCP card limit from $20K to just $6600. They've given me an opportunity to do an account review to challenge the decision. Here's what led to it.
Back in 2013, my wife and I formulated a plan to eliminate the rest of our credit card debt, which was about $38K. I had been successful through boards like this in applying and raising my credit limits on a number of credit card products to the point where my total credit line was in excess of $140K. And the original BCP line at $20K was acquired without the 3X CLI that so many around here do. But I had a long career in the high tech field at one employer, good salary and a relationship with Amex that dated back to 1988 when I got my first Green card. I carry a Platinum as well as the BCP.
But in September 2013, my wife was laid off unexpectedly from her employer (a small non-profit). Her salary wasn't a lot, but it was necessary to balance the proverbial books as it were and to pay off the debt we'd accumulated through home repairs, insurance copays, life in general. We all expected the time off wouldn't last more than the six month period of unemployment insurance. My wife is a PhD in environmental sustainability, a growing field.
But the time off ended up taking 16 months. Today was her first day of work at her new academic job. it does pay more than the old one did and in six months, it may pay more again. She's working for a friend of mine so there is more job security. But in that amount of time, the debt ballooned to about $120K. Schemes where I parked debt on 0% cards ended over time, which led to fairly ugly interest months since this past September. It was going to get super-ugly if the situation didn't change before tax-day, but at least now we can begin reeling in the cards one by one and I already have a plan set up for the next 2+ years to retire the debt.
But all this hasn't escaped the notice of some of the banks holding my cards. Citi was the first a month ago, CLDing me from $9500 to $7500. This wasn't that awful since I barely use that card anyway and had been paying it (and all of our cards) on time. I'd only been a Citi customer for 2 years. We'd gotten the card to park debt at 0% for a long time through an offer, thinking it was going to be the last card I was going to retire on my old plan at about this time. Instead, I'm now paying interest and dealing with a CLD.
The Amex issue was worse. The BCP card was (and is) our go-to grocery store card and it was one of the last cards with a significant amount of credit headroom. And after 25+ years, it wasn't what I had hoped. And I ran out of time before somebody at Amex noticed through the regular Experian credit reports they get (even though all of my scores are still above 700).
So I've been told I have two options to get things back to normal. One is to pay half of the balance by the middle of March...about $3000. That's technically possible but I had planned to pay off other higher interest cards first. The other is to go through the process of sending them my financial life (pay stubs, tax forms, retirement accounts, etc). Most of my net worth is in retirement accounts and dwarfs what I owe Amex, but it's just not what I was hoping to have to do and I still don't know if it will be enough.
So any advice from those whom have gone through this process? Anything else to suggest?
I'm a bit confused. What do you mean by 120k debt? You started with 140k in credit. How much are you carrying month to month? How long have you been carrying the debt for? How long have you been paying interest on your credit card debt? Has there been any AA on cards where you carried a balance with 0%apr? How much were you paying on the cards you carrying a balance on per month?
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@Anonymous wrote:If they're willing to restore your CL from you paying half your balance off by March, that's what I would do. I get that you want to pay the higher interest ones off first but if you value the AMEX as much as it seems just take that route.
I guess the question is how much you value amex compared to the interest payments you will have to make as a result of taking this path and another consideration of course would be the impact the CLD would have on your overall util. Maybe you don't value amex that much, but you would value the available credit for utilization purposes.
@Anonymous wrote:
Well you have three options
1) do nothing. You still have the BCP. In two years when the debt is paid off you can ask them for a CLI
2) pay off 3k. This would essentially be buying a higher limit on the Amex under the form of the higher amount of interest you will be paying by not paying off the higher interest card like you had planned. Calculate how much that will be. Is it $10? $100? $1000?
3) go through with the FR. This may restore your amex limit for free, but at the cost of your privacy. How much do you value that?
The keyword is may. At least we know with the 3k payment OP will be able to keep the CL. Once documents are submitted Amex could decide to CLD and the option of paying the 3k could be off the table. I got the sense that OP was not really sure how Amex will feel about their financial situation.
Why dont you consider possibly taking a loan against your 401K.
I know some people are very against doing that but if you have substantial money there you could borrow up to 50K and surely the interest that will save you on the CC debt will be higher than the return you will earn on that money over 2 years in the market.
@Anonymous wrote:
So your debt went from $38k to $120K when all your combined credit is $140k? So basically you only have 20k in credit available? If your limit on BCP is 20k, how much do you owe for it to be CLD?
This is one of the things my question was trying to get at. I don't think its all credit debt, because I think OP would have seen a lot more AA if the credit card debt was that high. Also, it seems like OP owes 6k on the amex, since 1/2 of that would be the 3k payment.