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Valued Contributor
wmarat
Posts: 1,754
Registered: ‎11-03-2007

Re: Why Are Some Members Afraid to Ask for CLI's due to a possible FR?

That's a theory, a reality works differently.


DI wrote:
The bottom line is one shouldn't be affraid to ask for a CLI from any bank.  Again, if one's credit and finance are in order there shouldn't be any fear. 

 

IN VINO VERITAS.
Established Contributor
Revike
Posts: 720
Registered: ‎05-04-2007

Re: Why Are Some Members Afraid to Ask for CLI's due to a possible FR?


txjohn wrote:

wmarat wrote:

As I see it, Amex wants to verify your income in some cases.

 

Amex can ask for pay stubs or w - 2, or bank statement, but Amex wants you to give up your privacy and permit them to have your tax documentation, therefore to provide them with information that they do not need to verify income.


Respectfully I disagree.  Income can and often is misstated.  Paystubs can be misleading and even forged, as can be w-2's.  Only an official tax return filed with and paid against are true indications of income.

 

AMEX charge cards represent a different type of debt than traditional CC's.  You have no option of minimum payments, therefore large CL's or charges represent a much higher degree of default risk if the income isn't in line, has changed or was misrepresented.

 

Just as in a mortgage, the lender has every right to request whatever form of income verification they may deem appropriate.  The consumer is under no obligation to comply.  The result will be decline of application or closure of account, but the consumer is in control of that scenario.

 

A $20,000 balance, due in full at statement, is very much a different debt than a $20,000 balance with a minimum payment of a few hundred dollars.

 

Once an individual undergoes an FR with tax returns, if the income is in line, then they are very likely to have less issues with AMEX from that point forward.  If the account was approved merely on stated income, then AMEX is trusting the stated income.  But at anytime they deem appropriate they want to verify the income, they are more than within their rights.

 

 


Just a few minor points ...

 

AmEx financial reviews are not limited to charge cards, they have also been done on credit card accounts that do have minimum payments offered (although AmEx much prefers PIF).

 

AmEx sometimes asks for costly accounting reports in addition to, or instead of, tax return information. And tax returns are not particularly accurate sources of income information in some cases. Depending on the time of year the F/R is conducted, the tax return information may be a year old or more.

 

Income requirements related to a mortgage and a credit card are generally not comparable. In the case of a mortgage, you are dealing with an obligation of much larger scale. In addition, for a mortgage, the income review occurs once, prior to the approval of the application.

 

If a customer does provide proof of sufficient income to AmEx as part of a financial review, that does not necessarily mean the customer is less likely to reviewed in the future. Some AmEx customers have received multiple F/Rs, including getting a second F/R within a year of the first.

 

Bottom line, AmEx hits their customers with F/Rs, yet their competitors do not, for comparable credit products. And even after doing that, AmEx has reported a default rate for those products that is no better than their competitors.

 

Back to the topic - the most common adverse action for CLI requests these days has come from Bank of America, and it is very good advice for BOA customers to refrain from making CLI requests unless they are completely willing to accept any unintended consequences. BOA (along with Citi) have the weakest balance sheet and and are actively looking to reduce the overall credit limits they offer to their customers. Kinda similar to a situation where, if a company is tightening its belt and seriously looking to cut costs in a bad economy, it's usually a bad time to approach your boss and ask for a raise, even if you think you deserve it. You may get a pay cut instead or find yourself at the unemployment office ... 

Senior Contributor
O6
Posts: 3,626
Registered: ‎10-13-2009

Re: Why Are Some Members Afraid to Ask for CLI's due to a possible FR?


DI wrote:
The bottom line is one shouldn't be affraid to ask for a CLI from any bank.  Again, if one's credit and finance are in order there shouldn't be any fear. 

 

I'm not sure fear is the prevailing factor.

 

Personally, I do not like to provide copies of income tax returns.  The data gleaned from an income tax return can be far more than simple income.

IAALBNYL
Established Contributor
Watchmann
Posts: 985
Registered: ‎05-14-2008

Re: Why Are Some Members Afraid to Ask for CLI's due to a possible FR?

If you can't stand the heat (of an AMEX FR) than get out of the kitchen (don't apply for the card).  As long as AMEX is within their legal rights they can do what they think is best for their share holders.  Quit whining about it if you don't like it.  It's their way of doing business.  If you don't like it there are alternatives;  Discover, Visa, MC, Diners Club, whatever.  Having an AMEX card is NOT a blank check to be able to charge any amount you wish.  
Moderator Emeritus
fused
Posts: 16,243
Registered: ‎03-12-2007

Re: Why Are Some Members Afraid to Ask for CLI's due to a possible FR?


Watchmann wrote:
If you can't stand the heat (of an AMEX FR) than get out of the kitchen (don't apply for the card).  As long as AMEX is within their legal rights they can do what they think is best for their share holders.  Quit whining about it if you don't like it.  It's their way of doing business.  If you don't like it there are alternatives;  Discover, Visa, MC, Diners Club, whatever.  Having an AMEX card is NOT a blank check to be able to charge any amount you wish.  
This is a reminder, again, to be friendly and supportive when posting in the forums.
Senior Contributor
O6
Posts: 3,626
Registered: ‎10-13-2009

Re: Why Are Some Members Afraid to Ask for CLI's due to a possible FR?

[ Edited ]

Watchmann wrote:
If you can't stand the heat (of an AMEX FR) than get out of the kitchen (don't apply for the card).  As long as AMEX is within their legal rights they can do what they think is best for their share holders.  Quit whining about it if you don't like it.  It's their way of doing business.  If you don't like it there are alternatives;  Discover, Visa, MC, Diners Club, whatever.  Having an AMEX card is NOT a blank check to be able to charge any amount you wish.  

 

As long as they provide a mechanism which doesn't force reliance only on income tax returns, you'd be right. 

 

Having a company verify income by obtaining tax returns directly from the IRS is one of the most intrusive methods possible.  In a word, it is simply overkill.

 

When I went through their FR review process they insisted on pulling copies of my tax returns directly from the IRS.  The discolsure they asked me to sign allowed not only for them to obtain the actual 1040, but all accompanying schedules.  That would, for the uninitiated, provide them access to your medical expenditures, travel and entertainment expenses, legal expenses and every other expense that one has that is tax deductible plus the DOB and SSN of all your dependants  Anybody reasonably lucid can see this as a substantial invasion of privacy.

 

Fortunately I was able -- at least in my case -- to convince AmEx of the error of their ways and had them accept employer pay records for their FR. 

 

I'm not sure what their process is now.  If they accept pay stubs or 1099's or W-2's then a FR is just a minor inconvenience.

Message Edited by O6 on 12-13-2009 09:45 PM
IAALBNYL
Senior Contributor
creditwherecreditisdue
Posts: 4,923
Registered: ‎04-19-2009

Re: Why Are Some Members Afraid to Ask for CLI's due to a possible FR?

Amex still requests release of tax return information.
Regular Contributor
RozBuds
Posts: 203
Registered: ‎09-27-2008

Re: Why Are Some Members Afraid to Ask for CLI's due to a possible FR?

[ Edited ]
I am sure AMEX is a good CC but I have never had one, never applied for one and most likely never will. I am happy and fine with the cards I have now even during the CLD and rate increase time. I can say (just from me) that AMEX is not my cup of tea nor am I their cup of tea. No sleep loss on either side.

Watchmann wrote:
If you can't stand the heat (of an AMEX FR) than get out of the kitchen (don't apply for the card).  As long as AMEX is within their legal rights they can do what they think is best for their share holders.  Quit whining about it if you don't like it.  It's their way of doing business.  If you don't like it there are alternatives;  Discover, Visa, MC, Diners Club, whatever.  Having an AMEX card is NOT a blank check to be able to charge any amount you wish.  

 

Message Edited by RozBuds on 12-14-2009 08:18 AM
Super Contributor
DI
Posts: 5,767
Registered: ‎01-28-2008

Re: Why Are Some Members Afraid to Ask for CLI's due to a possible FR?

Soon as I can find that CLI link, I'll be pressing it again.  AMEX seems to like hiding it. This time I cannot find it by doing a site search. 

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