topic Re: How to survive an Amex Financial Review? in Credit Cards

How to survive an Amex Financial Review?

Sevenfeet — Wed, 21 Jan 2015 00:11:42 GMT

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?

Re: How to survive an Amex Financial Review?

Anonymous — Wed, 21 Jan 2015 00:16:13 GMT

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.

Re: How to survive an Amex Financial Review?

red259 — Wed, 21 Jan 2015 00:19:06 GMT

@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?

Re: How to survive an Amex Financial Review?

red259 — Wed, 21 Jan 2015 00:21:16 GMT

@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.

Re: How to survive an Amex Financial Review?

Anonymous — Wed, 21 Jan 2015 00:23:50 GMT

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?

Re: How to survive an Amex Financial Review?

Anonymous — Wed, 21 Jan 2015 00:26:57 GMT

@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?

I think part of the OPs concern with 3) is that might not work anyway, so loss of privacy for nothing.

Strongly agree with working out #2. Even if the ohter cards are 10% higher than the Amex, it's not going to be a huge amount.

Re: How to survive an Amex Financial Review?

red259 — Wed, 21 Jan 2015 00:27:13 GMT

@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.

Re: How to survive an Amex Financial Review?

IWOL — Wed, 21 Jan 2015 00:28:27 GMT

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.

Re: How to survive an Amex Financial Review?

Anonymous — Wed, 21 Jan 2015 00:37:40 GMT

@Sevenfeet,

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? I think you are better off paying the $3000 because now that the limit has been decreased, it is going to have repurcussions on your other cards. Also, if you fill out the form for Amex to get the info. for the IRS, I read somewhere they can keep requesting with the IRS without you knowing as long you sign the form4506-T

Re: How to survive an Amex Financial Review?

red259 — Wed, 21 Jan 2015 00:37:00 GMT

@Anonymous wrote:
@Sevenfeet,

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.

Re: How to survive an Amex Financial Review?

Anonymous — Wed, 21 Jan 2015 00:42:38 GMT

@red259 wrote:
@Anonymous wrote:
@Sevenfeet,

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.

@red259,

I agree when i read your response. So if it not credit card debt thus the $120k, what is Amex worried about with someone having 14,000 available out of 20,000 assuming what is owed is 6,000 which is 30% of the line. I guess the lender has the right but 30% is not bad in my opinion.

Re: How to survive an Amex Financial Review?

Sevenfeet — Wed, 21 Jan 2015 00:50:19 GMT

@red259 wrote:

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?

We started with a little less than $40K of debt and racked up another $80K in a 16 month period while my wife was looking for work. So instead of working our way down, we continued our spending patterns for the first six months and then started dialing back after that. But some of our debt was on 0% arrangements that ended (Penfed, Citi) and when that happened, it was a tipping point that made the current situation worse. My plan is to reel it back in over a period of 2+ years....the first 6 months will be the toughest but if we can stay with the plan, it will get easier then and get much easier at this time next year.

Re: How to survive an Amex Financial Review?

Sevenfeet — Wed, 21 Jan 2015 00:56:22 GMT

@Anonymous wrote:
@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?
I think part of the OPs concern with 3) is that might not work anyway, so loss of privacy for nothing.

Strongly agree with working out #2. Even if the ohter cards are 10% higher than the Amex, it's not going to be a huge amount.

I am leaning to option #2, the problem is doing it in the time alotted. It would be easier to do it in three pay periods instead of two. What I had planned on doing was paying off my Discover and US Bank Cash + cards first since they are both at 20% and combined are about $7k. If you are doing the debt snowball, it's a good starting point before going for the big trees at it were. If I pay $3K to Amex first, it will delay the other cards by maybe up to 45 days but not a horrible length of time. And I guess the interest payments to Discover and US Bank aren't awful in the grand sceheme of things compared to what it will do to help my situation with Amex.

Re: How to survive an Amex Financial Review?

Sevenfeet — Wed, 21 Jan 2015 00:59:07 GMT

@IWOL wrote:
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.

That's possible, but I still lose interest on the principal for the amount of time I do the loan. That of course is against the interest I'm paying to service the current debt. I was seriously considering doing this anyway (it had been a topic of discussion with our financial advisor) had my wife's employment situation not changed.

Re: How to survive an Amex Financial Review?

Sevenfeet — Wed, 21 Jan 2015 01:12:58 GMT

@Anonymous wrote:
@red259 wrote:
@Anonymous wrote:
@Sevenfeet,

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.
@red259,

I agree when i read your response. So if it not credit card debt thus the $120k, what is Amex worried about with someone having 14,000 available out of 20,000 assuming what is owed is 6,000 which is 30% of the line. I guess the lender has the right but 30% is not bad in my opinion.

I doubt Amex would have cared that much about 30% used on a $20K credit line except when my credit report showed three large cards all at their limits. The trend was definitely in the wrong direction and I understand why they might move in this direction...Citi certainly had a month earlier. Once my wife makes her first paycheck in 10 days, the situation will begin to reverse itself. It's just that Amex wants to be first in line. At least they aren't asking for the whole amount, which wouldn't be possible in cash flow.

After the first few months, the plan is to pay off the BofA card over a period of 5-6 months ($20K). Once that's done, I'm going to balance transfer the travel cards and the remaining BCP balance to it and freeze the interest payments for a year. Then begin paying the Fidelity Amex and burn that down for another 5-6 month period. Then transfer money to it to freeze interest payments for a year there. Then come back to the BofA, pay it down over the next six months, balance transfer more to it, move back to Fidelity, lather rinse and repeat. I've calculated I can eliminate about $400 monthly in interest payments in the first six months from the budget, doubling that in a year. All savings will go to principal payments, continuing the snowball. it won't be necessary for the Chase Freedom, since the interest rate is so low it's basically a home equity line of credit in the budget.

Re: How to survive an Amex Financial Review?

Chris679 — Wed, 21 Jan 2015 03:20:39 GMT

OP it's time to start making smart financial choices and that means paying off highest APRs first so you can get out of the hole. Let them slash your CL, who cares. You are going to stop using this card because you have no grace period if you carry a balance. You stated this is your go to grocery card which means you are digging yourself deeper every time you use it by paying interest on your groceries from the moment you buy them! From now on you need to use cash for all purchases unless you have a card that you PIF.

You can get the limits reinstated once everything is paid off.

Re: How to survive an Amex Financial Review?

Anonymous — Wed, 21 Jan 2015 03:29:17 GMT

@Sevenfeet wrote:
@Anonymous wrote:
@red259 wrote:
@Anonymous wrote:
@Sevenfeet,

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.
@red259,

I agree when i read your response. So if it not credit card debt thus the $120k, what is Amex worried about with someone having 14,000 available out of 20,000 assuming what is owed is 6,000 which is 30% of the line. I guess the lender has the right but 30% is not bad in my opinion.
I doubt Amex would have cared that much about 30% used on a $20K credit line except when my credit report showed three large cards all at their limits. The trend was definitely in the wrong direction and I understand why they might move in this direction...Citi certainly had a month earlier. Once my wife makes her first paycheck in 10 days, the situation will begin to reverse itself. It's just that Amex wants to be first in line. At least they aren't asking for the whole amount, which wouldn't be possible in cash flow.

After the first few months, the plan is to pay off the BofA card over a period of 5-6 months ($20K). Once that's done, I'm going to balance transfer the travel cards and the remaining BCP balance to it and freeze the interest payments for a year. Then begin paying the Fidelity Amex and burn that down for another 5-6 month period. Then transfer money to it to freeze interest payments for a year there. Then come back to the BofA, pay it down over the next six months, balance transfer more to it, move back to Fidelity, lather rinse and repeat. I've calculated I can eliminate about $400 monthly in interest payments in the first six months from the budget, doubling that in a year. All savings will go to principal payments, continuing the snowball. it won't be necessary for the Chase Freedom, since the interest rate is so low it's basically a home equity line of credit in the budget.

What do you mean by freeze interest payments?

Re: How to survive an Amex Financial Review?

merlinflex — Wed, 21 Jan 2015 03:43:33 GMT

@Sevenfeet wrote:
@red259 wrote:

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?
We started with a little less than $40K of debt and racked up another $80K in a 16 month period while my wife was looking for work. So instead of working our way down, we continued our spending patterns for the first six months and then started dialing back after that. But some of our debt was on 0% arrangements that ended (Penfed, Citi) and when that happened, it was a tipping point that made the current situation worse. My plan is to reel it back in over a period of 2+ years....the first 6 months will be the toughest but if we can stay with the plan, it will get easier then and get much easier at this time next year.

$80k burned while she was out of work? With....

Re: How to survive an Amex Financial Review?

merlinflex — Wed, 21 Jan 2015 03:46:34 GMT

After the first few months, the plan is to pay off the BofA card over a period of 5-6 months ($20K). Once that's done, I'm going to balance transfer the travel cards and the remaining BCP balance to it and freeze the interest payments for a year. Then begin paying the Fidelity Amex and burn that down for another 5-6 month period. Then transfer money to it to freeze interest payments for a year there. Then come back to the BofA, pay it down over the next six months, balance transfer more to it, move back to Fidelity, lather rinse and repeat. I've calculated I can eliminate about $400 monthly in interest payments in the first six months from the budget, doubling that in a year. All savings will go to principal payments, continuing the snowball. it won't be necessary for the Chase Freedom, since the interest rate is so low it's basically a home equity line of credit in the budget.

Reminds me of Obama's SOTU just now......won't work

Re: How to survive an Amex Financial Review?

bobbay — Wed, 21 Jan 2015 03:54:42 GMT

@IWOL wrote:
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.

1+ you would be shifting a large portion of your revolving debt to low interest rate amortizing debt, not to mention the util relief your profile would see. if it were me, this is the route i would go. good luck