@NRB525 wrote:
@SouthJamaica wrote:I disagree with advice you have been given that there's nothing wrong with closing an account with a balance.
IMHO there's something quite wrong with that.
Your credit limit will no longer be factored into your aggregate utilization computation, while your balance will be.
Given your clarification in the later posts, can we agree to a clearer answer here;
that closing a card is not the end of the world for individual utilization, and the typical impact for aggregate utilization is also a nothingburger?
No I don't agree with that at all.
Its effect can be drastic or it can be mild, depending on what other limits and balances exist in one's profile at the time.
This article accurately describes the impact:
"When you close a credit card, particularly one that has a balance, the credit limit is no longer factored into your credit score, so your credit utilization ratio can shoot up immediately. Your credit utilization ratio measures how much of your total available credit you’re using. Credit utilization is based on overall credit available used across all cards and also on a per-credit card basis. If you lose some available credit but carry the same amount of debt, your ratio will go up."
Of course we can agree that it's not the end of the world, because (a) utilization has no memory, and (b) nothing is the end of the world except... the end of the world.
@SoCalGardener wrote:
@Save-n-Invest wrote:Amex does this for kicks. I am debt free. I PIF each month on everything. FICO north of 800. Been hit with CLD on to occasions. Next time will be strike three. I'm just not that into Amex.
As you know, we're a lot alike.
Which has me worried about my Amex accounts....
I'm trying to wrap my head around the CLDs here and in other threads. Was there literally nothing out of the ordinary going on for you, financially, when they cut your limit? I mean from a credit card company's perspective, of course.
Not a thing. Amex has these CLD episodes from time to time. Finances are in order. Utilization overall is usually 1%. During holidays it could go up to 2%. I am a transactor.
If it is at all helpful I had no issue until the first time I redeemed a reward. The punishment lady in the rewards department acted as if I was demanding her firstborn. Punishment lady was pushing gift cards. "I KNOW YOU GO TO HOME DEPOT!!!"
That was on Blue. It's a MR card that permits points to be used to pay an item on the current statement. It was a five and dime item. A Cannon flatbed scanner with a cost of about $89.00 from B&H Photo or Amazon. I don't recall the place of purchase off hand. In my case a few months in the SD makes them more accomodating.
Don't worry about an Amex CLD. They do what they do. Use Amex when it is useful for you. That's what they do.
@Loquat wrote:
@theNavigator wrote:American Express also just had my limit cut by 13k, down to just about where my balance is at, unreal. I am paying my small balance off and never doing business with them again. I advise people to be careful and steer clear of them they really aren't that special to be pulling this tbh.. Never had a company ever do this to me and I don't appreciate it.
@theNavigator I know it sucks and I won't make light of it. What you're experiencing is "balance chasing". As I'm sure you are aware, this happens when a lender is cutting your available credit with them to what they are comfortable with.
Once it starts who knows how long it will continue. Most of the time it's just until you reach their comfort level with you and your finances. There are some occasions where they do it until you've paid off the balance and then they proceed to close the card.
I think your advice to "steer clear of them" is misguided based on your current situation. Again, I won't make light of your situation nor will I tell you that you're wrong as your perception is based on your reality, and right now, they're looking at lot less favorable from your point of view. It doesn't make you right or them wrong, it's just your perception and while some would argue with your perception, I won't...because it's not going to change your point of view...nor should it; you're entitled to feel however you want about them and that's okay.
However, in my opinion, there is absolutely no reason for someone to steer clear of them. What you're experiencing is no different that what could happen at any lender if you happen to cross their algorithm in a way that makes them feel uncomfortable about the amount of available credit that has been extended to you. Lenders have risk tolerance and once anyone has exceeded such, actions are taken until they deem you less risky.
I hope whatever it is that has put you on the radar of Amex clears quickly so that you can once again go back to the feeling about them the way you once did prior to today when they cut your limit.
Best of luck to you.
@theNavigator I agree, this sounds an awful lot like what happened with my Wells Fargo Visa Signature card (at the time it was a WF Platinum card prior to a product change). Years ago I had maxed out my limit at $7500 with Wells Fargo. The increased my limit more to $10,000. Instead of paying that down I maxed that out too. They raised it again to $14,000 and unfortunately I maxed that out too, smh!
Eventually I got my act together and I took a lump sum of money and paid it all the way down to $2000. As soon as I paid it down Wells Fargo immediately reduced my card's limit to $2500. I was so upset and frustrated! I regretted paying that card down at the time because I had 3 other cards with much smaller limits that were maxed out still. Had I paid those other cards off completely they'd all have a $0 balance and then I could've paid a chunk of the Wells Fargo card off too but not as much.
Anyway, that was my first experience with a bank doing balance chasing. It was a tough lesson to learn, but one I indeed did learn. In hindsight I do understand why they did it, I was too much of a risk back then. Thankfully now I no longer carry balances on any of my cards. I finally am using credit more responsibly.
@theNavigator I'm so sorry this happened to you. I had this happen before with a Wells Fargo card. Definitly not fun and can be very frustrating. Best wishes to you going forward with whatever you decide to do with this card!
@Save-n-Invest wrote:If it is at all helpful I had no issue until the first time I redeemed a reward. The punishment lady in the rewards department acted as if I was demanding her firstborn. Punishment lady was pushing gift cards. "I KNOW YOU GO TO HOME DEPOT!!!"
Next time, do it online! The computer doesn't talk back to me, it just accepts my choice and issues the reward I've picked.
Thanks for the info on the non-factors that may have led to your CLD. I'm still just scratching my head at how/why they do this to good customers with no red flags.
And some of us don't have the time or the energy to chase after every shiny new thing; don't get me wrong, I understand why folks do it, but there is no way I'd have the patience for that. I've got my three cards, I'm good to go for a while; if AMEX ever removes me from the bad-boy list, I'd love to have a Delta SkyMiles card as I fly Delta a LOT; beyond that, meh, maybe a CapOne Savor.
@Anonymous wrote:
@B_Slow1 wrote:I can understand why the OP and others get frustrated with this credit card companies. We’re led to believe that we’re entering a “partnership”, where they lend money, we promise to pay it back, and they profit off the back end.
But many of us don't act as if there is a long-term partnership at all (except when it would benefit us.) We open a card, maybe get a SUB, use for a bit, and then, when the new shiny comes along, we go for that, and, if the bank is "lucky" we remember to charge a dollar or so on the old card every few months to keep it active. Both sides want to maximize their own benefit, and that's fine, but don't complain when a bank acts in its own interest, any more then they should complain when you move nearly all your purchases to the next better card.
The "many of you" who don't feel as though they are in a partnership with a lender wouldn't have posted as the OP did. They would have just taken the L and accepted the damage done to their credit and portfolio. But many other people do feel that way. I'm sure you've seen the posts. And as I said, I can understand that perspective. Frankly, its disconcerting that they get to hide behind an algorithm without justifying their position, and we all have to accept it.
