Combining AMEX credit lines

[Hcontreras]

Hello all,
Just some quick background, I have had an AMEX Everyday and Blue Cash Everyday card for almost 4 years now. Well, about a year ago I applied for and got APPROVED for 2 more AMEX cards (Everyday Preferred and Blue Cash Everyday Preferred, both with annual fees of $95 each) for a large purchase I was going to make ($20,000) and also take advantage of the 12 months no APR offer on both cards. Well, It worked out just the way I planned and paid off the balances on both cards before the "no APR" offer expired. Now, I want to close both "Preferred accounts" so that I won't have to pay the annual fees anymore. I talked to AMEX and they said I can close the preferred accounts and "reallocate" the credit limits on both. Which means they will combine the credit limits into one card...Meaning, the credit limit on the Everyday Preferred will be combined with my Everyday card..and the same with my Blue Cash Everyday Preferred to combine with my Blue Cash Everyday. The end game for me is not to pay annual fees on these preferred cards anymore. My large purchase is done, paid off, and I no longer have use for the "preferred" cards. Therefore, no need to pay annual fees on cards I will not use. Do you guys see a potentially negative impact that this could have on my credit score? My score right now is around 783. My initial thought is that is shouldn't impact my score much (if at all) since credit limits aren't going to be removed, but rather combined. Therefore, my overall "credit limit" will remain the same (in these eyes of the credit bureau's) . Is my assertion correct on this? Your input is greatly appreciated!

[Anonymous]

The only tiny wrinkle in a situation like this is to make sure at the end of the day that you still have 3-4 open credit cards.  If I read your signature correctly, you have 11 revolving lines now and will have 9 after the reallocation/closure is completed.  So you are set there.

(To give an extreme example at the other end of the spectrum, suppose Bob has four credit cards total, each with a CL of 5k, all with Bank of America.  He combines all four and ends up with one 20k CL card at the end -- and three closed cards.  Going from four open cards to one open card would hurt him.  Your situation is very different.)

Your Average Age of Accounts will be unaffected by this move.  Your total CL will be the same and it will be actually easier to keep your individual utilization low than it was before.

There is one last wrinkle I should mention, but this also does not apply to you.  When the resulting combined card has a CRAZY big credit limit, that can cause it to be dropped from your total CL for some FICO models, especially the older mortgage models.  The extremely old models may do this starting at CLs as low as 35k.  (It may be higher.)  But your CLs will still all be < 35k, so you are fine. 

[Hcontreras]

Thanks for the reply! Much appreciated! I haven't updated my sig in about 1-1/2 years, but for the most part not a lot has changed. Nothing significant anyway. Still will have 11 revolving trade lines, credit limits may have increased slightly on some, but again, nothing too crazy. Regarding my AMEX cards, it looks like when I combine the limits, my limits on the 2 remaining AMEX cards will look like this: Blue Cash Everyday, $28,000, Everyday Card, $29,500. I think I should be fine in terms of being dropped from CL on some Fico models you mentioned right?

[Anonymous]

Yup you will be fine.

[NRB525]

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@Hcontreras wrote:
Thanks for the reply! Much appreciated! I haven't updated my sig in about 1-1/2 years, but for the most part not a lot has changed. Nothing significant anyway. Still will have 11 revolving trade lines, credit limits may have increased slightly on some, but again, nothing too crazy. Regarding my AMEX cards, it looks like when I combine the limits, my limits on the 2 remaining AMEX cards will look like this: Blue Cash Everyday, $28,000, Everyday Card, $29,500. I think I should be fine in terms of being dropped from CL on some Fico models you mentioned right?

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Based on my own experience, I would not assume that the full amount of the limits will be combined. You are at total exposure of $53k with all four AMEX cards. AMEX tends to give new $10k limits quite freely, however when I tried to reallocate $10k from a $15k EDP to boost my $10k SPG to $20k, it kept refusing ("system unavailable, try again in 24 hours"). After four such attempts, I ratcheted down the request to move only $5k and it went through just fine. I am at $47k total exposure on AMEX: $20k Delta Platinum, $15k SPG, $10k EDP, $2k Hilton (after reallocating to Delta).

It could very well go through without a hitch, but your individual card limits are going to be raising their individual questions, as the concentration increases.

As to the score impact, agreed, there should be none.

[Hcontreras]

Thanks for the reply. Your feedback is much appreciated! Quick question: when you say "it kept refusing" were you trying to do it online or something? I was actually speaking to an AMEX customer service rep by phone when he pitched the idea to me yesterday. I didn't realize I could do this, I was just calling to close the accounts. One thing he did say to me though is that they could transfer the entire balance over on both cards minus $500 on each card. Cited it just as a "AMEX policy". Then said "after that goes through, you can then cancel the preferred cards with a $500 credit limit on each". He proceeded to ask me if I would like the go ahead and "get that taken care of now"...I hesitated and told him I would think it through first and call back once I made that decision. I was worried about the implications and wanted to do more research before I did so.

FYI, One last thing: he also gave me another option, he said "We can switch you to a fee free card" since my reason for wanting to cancel the cards was because of the annual fee...and then said, "we can just make one card Everyday and the other Blue Cash Everyday cards. I was stunned because I told him I already had those cards and "I can have two of each card"? He said "yes". Then, I just told him I would call them back. This option wasn't appealing to me since it makes no sense for me to have two of each card. Weird!

[NRB525]

Yes, I was using the on-line credit reallocation tool. That method probably does not have the same controls over the movement of limits, where a CSR probably would have more capability.

An advantage to downgrading (product change or PC) the EDP and BCP cards to ED and BC is that those accounts remain active and continue to age on your file. So you would have 11 files aging along rather than "only" 9. There is a FICO score attribute which looks at "Percentage of cards which have a balance". Having more cards is a bit of a help in this area. I have 24 open credit cards, and can track a few points change as the percentage of cards that report a balance goes down. Each file is different, so the impact varies, but it is likely a small influence on your scores. You would only want to do this if you were comfortable continuing to manage 11 cards.

The downside to keeping 4 AMEX revolvers open is, I think that is the limit of AMEX revolvers you can have open. The charge cards are not in the same restriction, but the charge cards all have AF.

You can certainly downgrade the BCP and EDP for the time being, then decide how you want to proceed, or just figure you want to try to combine the limits and be done with it.

[Hcontreras]

**Update**:

I went ahead and made the decision to just do a PC on both preferred cards. I made the Everyday preferred card an Everyday card and the BCEP a BCE card. APR, cash APR, and credit line will all remain the same...BUT with no annual fee on both. NO HARD PULL OR INQUIRY (with was a biggie for me). I definitely didn't want that. The account number and everything stays the same! Thanks to all for the feedback!