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Decreased credit limit when paying off Amex

wanting2swagger
Established Contributor

Decreased credit limit when paying off Amex

We recently paid off my husbands American Express card(11,000), it seems they don't like that.  They decreased his credit limit without any reason to do so, we always paid more than the minimum payment and always paid promptly when the bill became due.  I feel as if he was punished for taking away interest from them.  Is this standard practice?  has anyone else had this happen?  Super mad, trans union dropped him 7 points for this.

EQ: 812 TU: 823 EXP: 826
Message 1 of 18
17 REPLIES 17
K-in-Boston
Moderator

Re: Decreased credit limit when paying off Amex

Amex definitely likes being paid.  Balance chasing is a common practice when consumer behaviors concern a lender.  Was the balance carried for a long time?  Were the payments above the minimum substantially above the minimum (i.e. If the minimum payment was $80 did you pay $100 or $800)?  Were balances also being carried on other cards?  Were balances in general increasing overall?  Any recent derogatory credit issues such as late payments?

Message 2 of 18
wanting2swagger
Established Contributor

Re: Decreased credit limit when paying off Amex

The balance was roughly a year.  He only has three cards and the balances were low, this is his preferred card.  We always paid atleast 200 a month over the payment amount.  Payments had not increased all were going down, even Amex. Credit history is spotless, no lates, no a-paying for credit, the only difference is we refinanced our house but that was 2 weeks ago and they don't know about that yet.   That's why we were so surprised for a decrease.  


@K-in-Boston wrote:

Amex definitely likes being paid.  Balance chasing is a common practice when consumer behaviors concern a lender.  Was the balance carried for a long time?  Were the payments above the minimum substantially above the minimum (i.e. If the minimum payment was $80 did you pay $100 or $800)?  Were balances also being carried on other cards?  Were balances in general increasing overall?  Any recent derogatory credit issues such as late payments?



@K-in-Boston wrote:

Amex definitely likes being paid.  Balance chasing is a common practice when consumer behaviors concern a lender.  Was the balance carried for a long time?  Were the payments above the minimum substantially above the minimum (i.e. If the minimum payment was $80 did you pay $100 or $800)?  Were balances also being carried on other cards?  Were balances in general increasing overall?  Any recent derogatory credit issues such as late payments?


 

EQ: 812 TU: 823 EXP: 826
Message 3 of 18
CreditSweeper
Established Contributor

Re: Decreased credit limit when paying off Amex

While a lot of lenders in the current environment don't like large balances revolved for a long period of time with low/low-ish payments every month, AMEX is a lender that has a history of preferring those that pay in full each month as opposed to revolving a balance for an extended period of time. 

The limit decrease has nothing to do with them retaliating for loss interest. Instead, they are reducing risk to what they see as signs of finiancial hardship. 

Personal Credit -
AMEX: Platinum, Gold, Green, Blue Cash Preferred
PNC: Cash Rewards, Points
BOA: Cash Rewards
NFCU: Flagship Rewards, Cash Rewards, CLOC
PSECU: Founders
BB&T: Spectrum Cash Rewards
CapOne: Quicksilver
Discover: IT Chrome, IT
Synchrony: PayPal 2%, PayPal Credit
Barclays: Uber
PenFed: Power Cash Rewards, Platinum Rewards
Alliant: Visa Signature
Goldman Sachs: Apple Card
BBVA: Clear Points
FNBO: Rewards
Store Cards: Target, Macy’s



Business Credit-
AMEX: Delta Gold, Amazon Prime, Simply Cash Plus
PNC: Visa Business
Synchrony: Lowes
Message 4 of 18
Remedios
Moderator

Re: Decreased credit limit when paying off Amex


@wanting2swagger wrote:

We recently paid off my husbands American Express card(11,000), it seems they don't like that.  They decreased his credit limit without any reason to do so, we always paid more than the minimum payment and always paid promptly when the bill became due.  I feel as if he was punished for taking away interest from them.  Is this standard practice?  has anyone else had this happen?  Super mad, trans union dropped him 7 points for this.


 

What was the balance and how much was the minimum payment?

I know you said you paid $200 over minimum,but there is a big difference if balance was only a few thousand or if the card was maxed. 

 

If the card was maxed, than $200 in addition to minimum payment is barely doubling it. 

 

They aren't punishing your husband for not paying the interest. They are trying to prevent card being run up again in the near future until your financial situation is a bit clearer to them. 

If the card wasn't in 0% promo, and balance was high, that's financial distress, hence risk mitigation.

If card was in 0% promo, they cannot tell if you're taking advantage of it or are unable to pay if it goes on for too long. 

When someone asks you *What's wrong*, and you're not sure if you want to start listing it in alphabetical or in order of importance.
Message 5 of 18
wanting2swagger
Established Contributor

Re: Decreased credit limit when paying off Amex

He had a 19,000 credit limit,  owed 11,000 payment was something like 350, we paid 550 plus 

EQ: 812 TU: 823 EXP: 826
Message 6 of 18
longtimelurker
Mega Contributor

Re: Decreased credit limit when paying off Amex

As others have said, it's pretty common, and more so when the banks are nervous about the economic climate.   

 

Basically, the bank was unhappy with the outstanding balance.   And, with credit cards, they cannot insist on immediate payment, or even a partial payment more than was agreed, even if they close the card (unless they can prove fraud).  So the next best thing, from their view, is to reduce the credit limit every time you pay it down.  It sounds like you paid off a lot at once, but many experience this "balance chasing", if you pay $200, the limit gets reduced by $200.....

Message 7 of 18
FlaDude
Established Contributor

Re: Decreased credit limit when paying off Amex

It seems like balance chasing threads are on the increase, so it appears that lenders are getting antsy. I already mentioned this in another thread, but 4 years ago I had huge maxed out balances on pretty much all my cards, and was never balance chased once while paying them down. Lenders are spooked and limiting their exposure, it has nothing to do with how much interest they are collecting.

 

Note too that a CL decrease alone won't lower your score, it should only happen if you have balances and the CLD increases your utilization %. 

Scores: March 21 FICO 8: EX 810, TU 808, EQ 813
AoOA: closed: 36 years, open: 25 years; AAoA: 11.8 years
Amex Gold, Amex Green, Amex Blue, Amex ED, Amex Delta Gold, Amex Hilton Surpass, BoA Platinum Plus, Chase Freedom Unlimited, Chase Amazon, Chase CSP, Chase United Explorer, Citi AA Plat, Sync Lowes, Sync JC Penney - total CL 145k
Loans: Chase car loan (35k/6yrs 0.9%)
Message 8 of 18
wanting2swagger
Established Contributor

Re: Decreased credit limit when paying off Amex

Thank you for the info.  And the other accounts on there or the car and our mortgage, Both went down in balance owed. It's always hard to figure out how fico works, And when it's Trans Union it's even harder since they don't specify exactly it just showed up in a notification that the credit limit had gone down

EQ: 812 TU: 823 EXP: 826
Message 9 of 18
Remedios
Moderator

Re: Decreased credit limit when paying off Amex

@wanting2swagger  where is the notification on scoring change coming from?

What do you use to monitor your CR and scores? 

 

So, he only has one card? 

When someone asks you *What's wrong*, and you're not sure if you want to start listing it in alphabetical or in order of importance.
Message 10 of 18
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