Amex reduced credit limits. Are we back in 2008?

[Anonymous]

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@Superduper2014 wrote:

@Anonymous 

Ha! Yes.. I am sounding alarming. Thanks man. I will post as soon as I talk to them. I hope to be at least the same after all of this is said and done. 

@Anonymous I am the kind who overthinks too much. It has gotten worse as I age.  

@K-in-Boston I will call today. Thank for all your help and putting up with me. 

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I'm an overthinker too. Great for troubleshooting issues with electronics and computers. Easy path to madness with credit. 😂 

Good luck! 👍 

[Brian_Earl_Spilner]

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@iced wrote:

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@Superduper2014 wrote:

@recoveringfrombk7 

Yes. I was planning on paying with my own funds. 

My strategy changed when I realized the economy will get worse before it gets better and since I had excellent credit I was able to get approved for more cards and it is my own personal opinion that I much rather pay a transfer fee, even if it is $600, in order to keep cash in the bank for whenever things get worse. If things turn around fast, I will be paying them all off. 

Also, if things don't get that bad and we miraculously stop this virus, then the fees paid for a bal tra were just like paying for insurance in mi mind. Everyone prepares for things differently, but having gone through the 2008 financial crisis and seeing what happened to credit lines, etc I got spooked and it seems that Amex got spooked with me too. Remember some banks are not even doing HELOCs anymore.

It is all about managing your own risk and for now I feel like using credit and holding cash is my best strategy according to my personal circumstances. The car application was for my girl friend. Not me. 

Also, since this thread has started to go into a direction that was not my intention. I hope the mods don't mind I start a new thread asking what is the best way to talk to Amex and try to reinstate my CL. 

Best

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Does this strategy actually consider endgame scenarios? I’m not sure it does. Let’s see:

- Quick Recovery: you pay BT fees as insurance against problems. Some probability of net loss.

- Slow Recovery: you carry balances to keep cash. You pay more interest in the name of insurance. High probability of net loss.

- Slow Recovery + you are impacted (lose job, etc): you burn emergency cash and also have high balances accruing interest. Game over comes much faster due to higher starting debt.

Basically, your strategy is only effective with the best-case scenario but you’ve convinced yourself it’s a hedge against the worst-case scenario.

Debt is debt. You’re Robbing Peter to pay Paul while telling Peter it’s in his best interests. You already dug the hole, and this is just the latest reason you’ve given yourself not to fill it in. Using credit as a way to hold cash is as deceptively unsafe as people believing SUVs are safer because they’re theyre bigger than cars.

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I'm agreeing with this. It's why I decided to pay off all my debt. If covid extends, it's easier to weather it with my available credit free. I can spread my spend across cash or extend a purchase on credit. There's way more flexibility. If I left everything the way it was, I would just burn through my cash and still have $11k in debt, which is 3 months of bills for me. Now, that same $11k free is equivalent to 26 months of bills for me if I run into issues.

[Superduper2014]

UPDATE:

I called and was informed that my fico was 750 with Equifax despite all the hard inquiries I had. 

They would restore the CL if:

1) For the small card I have to send proof of income, checking account statements, etc...

this is to restore 4k

For the big card:

2) I have to pay $5200 and it is guaranteed to be restored to $26,500 within 30 days. 

 or I can send in the same as above (poi, etc)

I mentioned, that I could pay if off completely today and if I did that what is the guarantee that they won't do what they did on my smaller card, which is reduce the CL to $1000, basically implying they didn't reduce the big line further because I was carrying a balance. He stated, there is no guarantee for that and that accounts are reviewed every 6 months. 

I am waiting on an email that will tell me what to send in. I might just send in the documentation to see if that works out, although it is tempting to just pay the amount they request on the big card and play ball. After all I am still going to pay them. I just don't want to pay them off for them to then lower my big card to 1k. 

Thanks for your help guys. 

I need to figure out what to do with Penfed on my girl friend's now. She is mortified to call them for review Not even sure it is even worth it. 

[K-in-Boston]

Thanks for updating us!  From previous "if you pay us X we will do Y" threads on Amex CLDs, they do keep their word.

[Anonymous]

I'm late to this thread but I wanted to highlight something that seemed to have been minimized by the commenters who responded.

In post #18 @Superduper2014 said the following:  

"I opened the ED card and used it for a small bal trans with no fee and the rest for daily purchases. My daily card for groceries, etc. 

I was paying this cards minimum payments since I have zero apr until October"

Since the minimum payment on the Everyday card is 1% of the statement balance, its likely that the balance was increasing over time due to using the card for daily purchases;  and it is this increase that prompted Amex to lower the limits.  This is simply a risk mitigation action by Amex and it has nothing to do with the perceived state of the economy.

It is never a good idea to commingle a balance transfer with ongoing purchases regardless of how attractive the 0% APR appears.  And specifically with Amex, it is well known that you need to show progress in paying down your balances to avoid adverse action.

Just a week ago a similar comment was posted and the reason for the CLD appears to be the same as in this case.

[HeavenOhio]

Yeah, never pay only the minimum with AMEX unless it's a one-off that occurs in the midst of much higher payments. If you want to carry a balance and make minimum payments for a while, come here first and find out which banks will tolerate it. AMEX is the absolute poster child for banks where it's a bad idea.

[Anonymous]

I agree, paying only the minimums on an ever increasing balance doesn't look good. Nor does it  bold well for the person doing it when the 0% promo runs out catching you off guard, meaning for several a race against a clock to fine another promo rate or deplete some savings. 

Especially so with Amex, an known Transactor type lender. However, if a balance is being carried they like to see headway.

Recently I realized my Freedom 0% rate will be expiring and ahve started to work on paying it down faster. 

[Superduper2014]

@HeavenOhio Good advise. 

Let's say Amex wants a $300 minimum payment. What is the amount you should pay to appease them if you want to pay the minimum possible during the promo? 

Also, which other banks/lenders are sensitive to this off the top of your head. 

Thanks

[Anonymous]

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@Superduper2014 wrote:

@HeavenOhio Good advise. 

Let's say Amex wants a $300 minimum payment. What is the amount you should pay to apiece them if you want to pay the minimum possible during the promo? 

Also, which other banks/lenders are sensitive to this off the top of your head. 

Thanks

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Pay AMEX and Chase 3X minimum to be safe. Everyone else, 2X. 

[Remedios]

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@Superduper2014 wrote:

@HeavenOhio Good advise. 

Let's say Amex wants a $300 minimum payment. What is the amount you should pay to apiece them if you want to pay the minimum possible during the promo? 

Also, which other banks/lenders are sensitive to this off the top of your head. 

Thanks

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@Superduper2014  you cannot negotiate to appease them. Whatever amount they give you is what you need to pay. If you continue with minimum payments, Amex is going to do Amex things. 

As far as which lender would allow you to make minimum payments while continuing to rack up balances, outside of the credit unions, I cannot think of any lender who is comfortable with the situation you're describing. 

The only difference is that other lenders wont "negotiate" or re-open cards if they decide to close them. 

If you use card for BT, or to take advantage of 0%, balance must go down, not up for a year. 

I dont want to sound too preachy (moderately preachy is okay), but there is a lesson to be learned here.