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Established Member
Posts: 36
Registered: ‎08-09-2013
0

Interesting situation. Need opinions from the experts... or people who know american Express

Hey let me try to keep this situation simple with the facts clearly listed. 

 

My Friend is currently 22 years old. 

 

My friend applied for Amex about 1.5 years ago. He claimed he made 40k a year. Honestly he probably made 16-20k. 

 

Since then he has aquired the AMEX GPR , upgraded to a Platinum and has a Amex BlueSky

 

He has alot of money in his checking account around 100k as of Mid Summer. 

 

From July - October he has spent 30k on his amex cards. ( Rolex, Tailored Suits, etc... ) 

 

He has the cash to pay it. But he has just been paying the minimum or a little over. 

 

American Express has just requested tax forms to see his income. Told my friend 15 days to give information or close accounts. 

 

 

Questions: 

 

Will american Express close the accounts for seeing he lied about income? 

 

Is him paying the minimum signaling a red flag. Possibly displaying a recent splurge he couldnt afford. 

 

Will his real income showing make them change his credit lines? 

 

or 

 

Will he supplying his tax forms simply solve all the problems american express would be having. 

 

 

Just asking for him because I find his situation interesting. 

 

Does spending always need to be assumed based on what you make? Credit card companies dont assume money already that could be in checking and savings accounts? 

21 Year Old, College Student in NYC.

Discover IT - 2000 ; Chase Freedom - 2000 ; American Express GPR - NPSL ; American Express Delta Sky Miles Gold - 6000 ; Chase Saph Pref - 9000 ; Citi Thank You Pref - 9500

Community Leader
Senior Contributor
Posts: 27,621
Registered: ‎02-07-2013
0

Re: Interesting situation. Need opinions from the experts... or people who know american Express

If those tax forms don't match close to what he stated say bye bye Amex 

So why submit when he lied in the first place by almost doubling reported income 

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Super Contributor
Posts: 11,212
Registered: ‎04-22-2013
0

Re: Interesting situation. Need opinions from the experts... or people who know american Express

It's not the trigger that you (or friend) needs to be concerned about now, the question is whether the income discrepency is enough to make Amex close the cards.   Any idea what the tax return will show, the 15K figure or so?   And what about current income, is that the same?

 

And even if they don't worry about the difference, the question is whether the actual income is enough to support the cards.  Money in the bank is good, but they can quickly go without a salary to replenish

 

But there aren't great options, just: send in the form and see what happens, or don't send in the form and the cards will close

Citi: Forward, AA Select Plat, Double Cash, Dividend. Chase: Amazon, Freedom, CSP. Cap One: 2 x QS. Penfed 2x Plat Rewards. US Bank: Cash Plus. Barclays: Arrival, SM. Amex: BC, BCE, ED. Nasa FCU. Ebates, FIA Fidelity Amex, Discover IT Miles.

Senior Contributor
Posts: 9,315
Registered: ‎10-21-2012
0

Re: Interesting situation. Need opinions from the experts... or people who know american Express

[ Edited ]

Jmdurbz wrote:

Hey let me try to keep this situation simple with the facts clearly listed. 

 

My Friend is currently 22 years old. 

 

My friend applied for Amex about 1.5 years ago. He claimed he made 40k a year. Honestly he probably made 16-20k.  In other words, he falsified his income?

 

Since then he has aquired the AMEX GPR , upgraded to a Platinum and has a Amex BlueSky

 

He has alot of money in his checking account around 100k as of Mid Summer. 

 

From July - October he has spent 30k on his amex cards. ( Rolex, Tailored Suits, etc... ) 

 

He has the cash to pay it. But he has just been paying the minimum or a little over. 

 

American Express has just requested tax forms to see his income. Told my friend 15 days to give information or close accounts. 

 

 

Questions: 

 

Will american Express close the accounts for seeing he lied about income?  If his income does not match what was submitted on his application and/or current tax transcripts, then more than likely AMEX will close them.

 

Is him paying the minimum signaling a red flag.   You bet, to some degree (i.e patterns don't match up).   Possibly displaying a recent splurge he couldnt afford. 

 

Will his real income showing make them change his credit lines?   Although, in some instances this is possible, it will be up to AMEX whether they close any accounts and/or reduce the exposure on the revolving tradeline - or close all of them.

 

or 

 

Will he supplying his tax forms simply solve all the problems american express would be having.  It depends.

 

 

Just asking for him because I find his situation interesting.   Well, for one - don't fudge income!

 

Does spending always need to be assumed based on what you make?  Pretty much for most lenders, especially with AMEX. Credit card companies dont assume money already that could be in checking and savings accounts?  Those are just liquid assets and can be retired/liquidated at any given time.


I'm certain others will chime in on the possible outcomes.

Moderator
Posts: 27,207
Registered: ‎09-13-2012
0

Re: Interesting situation. Need opinions from the experts... or people who know american Express

If your friend has that much money in his accounts why would he pay just the minimum or a little more?

To answer your questions on if the income doesn't match-if he were a little off 10-20% I would say he's fine. It sounds like he doubled his income. I'm sure they want to know how someone who makes $40k can afford the $30k in 3 months.

Unless he can show a new job or income increase -his chances of closure are high.
Established Member
Posts: 36
Registered: ‎08-09-2013
0

Re: Interesting situation. Need opinions from the experts... or people who know american Express

Ha. figured some would think by saying "friend" it was me. I just got my first AMEX 1 month ago. 

 

Yeah so I guess he should just hand over the paperwork and get dealt with. 

21 Year Old, College Student in NYC.

Discover IT - 2000 ; Chase Freedom - 2000 ; American Express GPR - NPSL ; American Express Delta Sky Miles Gold - 6000 ; Chase Saph Pref - 9000 ; Citi Thank You Pref - 9500

Community Leader
Senior Contributor
Posts: 27,621
Registered: ‎02-07-2013
0

Re: Interesting situation. Need opinions from the experts... or people who know american Express


Jmdurbz wrote:

Ha. figured some would think by saying "friend" it was me. I just got my first AMEX 1 month ago. 

 

Yeah so I guess he should just hand over the paperwork and get dealt with. 


Also other lenders may follow if the friend has other cards once Amex shows on CR's as closed by grantorSmiley Surprised

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Established Member
Posts: 36
Registered: ‎08-09-2013
0

Re: Interesting situation. Need opinions from the experts... or people who know american Express

wow , thats crazy. His credit can end up going to **bleep**.

 

He has Chase Freedom , Discover it, Citi Thank you, Amex Gold, Amex Plat, Amex Blue Sky, 

21 Year Old, College Student in NYC.

Discover IT - 2000 ; Chase Freedom - 2000 ; American Express GPR - NPSL ; American Express Delta Sky Miles Gold - 6000 ; Chase Saph Pref - 9000 ; Citi Thank You Pref - 9500

Super Contributor
Posts: 11,212
Registered: ‎04-22-2013
0

Re: Interesting situation. Need opinions from the experts... or people who know american Express

Actually, there is a third (bad!) option.  Your friend could close the cards now (if the view is that Amex is likely to do so anyway).    This prevents "Closed by Issuer" on the CR, which although that has no impact on score, might be a (slight) negative on manual review.

 

The advantage of doing this or, not sending in the forms, again if you feel the likelihood is closure anyway, if that it avoids potential blacklisting by Amex (for lying on the app).

If and when your friend applies for an Amex again, he will have to provide the tax docs, but at that stage he can be more truthful, and maybe have a better income.  Downside is that cards will certainly be closed, whereas there is a possibility they wont be if the forms are provided.

Citi: Forward, AA Select Plat, Double Cash, Dividend. Chase: Amazon, Freedom, CSP. Cap One: 2 x QS. Penfed 2x Plat Rewards. US Bank: Cash Plus. Barclays: Arrival, SM. Amex: BC, BCE, ED. Nasa FCU. Ebates, FIA Fidelity Amex, Discover IT Miles.

Moderator
Posts: 27,207
Registered: ‎09-13-2012
0

Re: Interesting situation. Need opinions from the experts... or people who know american Express

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