Tuesday, October 14, 2008

Chasing The Balance -- What It Is And Why It Sucks

One nice thing about having my own Web site is that I can see how my readers find me. As previously disclosed, I monitor my traffic with Sitemeter and Feedburner. I don't collect any personal information about my readers, but I can see how they landed at my doorstep (GlobCredit.com). If they find me through a Google search, meanwhile, I can see what search terms they used. It's quite useful for me, because it often gives me story ideas. Which brings me to today. Seems a lot of my readers are seeing their limits reduced -- to right above their current balances. That's called "chasing the balance," or "balance chasing." And it sucks.

I have mentioned so-called balance chasing several times since July. American Express seems to be the worst when it comes to this. Bank of America probably isn't far behind. However, it's become more apparent that other banks are stepping up the practice as well. (Indeed, someone found my site yesterday in what could be a response to a credit-limit decrease on a Home Depot card.)

I think the people with the highest risk of seeing their balance chased are those who have a significant balance (that does not get paid in full) and those who pay their balances off too slowly. I think credit card companies especially hate "slow payers." These, I believe, are the ones most at risk. The card company thinks that you are struggling when you just make minimum payments, or can't chip away at balances more aggressively.

Chasing the balance sucks because it makes the customer look as though he or she is maxed out on the credit card, which hurts the customer's FICO score. It's bad news for the customer. Balance chasing occurs when you pay off part of your balance and the credit card company reduces your credit limit to just above your new balance. Your card looks as though it is maxed out until you pay your bill in full. Given that utilization accounts for 30% of your FICO score, it's not difficult to understand why balance chasing hurts.

Balance chasing is compounded because other lenders, who monitor your credit reports each month, often get into the act as well. Creditors see your utilization ratio go up, and see your scores go down. Creditors assume you're having financial trouble. As a result, your other creditors reduce your limits, too. It's a vicious cycle. If enough of them get into the act, your FICO score can crater.

There is only one way to ensure that balance chasing doesn't hurt you. Carry no balances. Even if a creditor reduces your limit, it won't hurt your utilization ratio. Of course, if you happen to get a credit-limit reduction during the middle of a billing cycle, while you are carrying a balance that has not yet been paid in full, you could take a short-term hit if you let that balance report to the credit bureaus. If you suffer this kind of credit-limit reduction (mid cycle), my suggestion is that you pay off the balance before the new billing cycle begins.

Another thing that you might consider, if you do realize that your credit-card company is chasing your balance, is ask your other credit-card companies for a credit limit increase. Your goal is to simply replace the limit that you lost with the creditor that is chasing your balance. FICO looks at utilization two ways: per individual account and overall. Adding more additional credit will help your overall utilization ratio, even if the individual card that's being chased takes a utilization hit.

Of course, adding new credit could be easier said than done. If you are being subjected to balance chasing, there's a chance that it is warranted. Maybe you are overextended, which is why the card company is chasing your balance. If you fall into that particular category, it may not be easy to get credit-limit increases or new credit cards. You know my old saying: get credit when you can -- not when you have to. When you need it most (and you're most desperate), creditors often deny you. When you don't need it at all, creditors don't mind extending it to you. It's like that with everything in life, eh?

For those of you reading me for the first time (especially those finding me through a Google or AOL search), at least you now know there is a phrase for what is happening to your credit limits.

Chasing the balance: You now know what it is and you know why it sucks.

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TheVibeRAIDER said...

First dibs!


TheVibeRAIDER said...

So, let's take my $41,000 CC. By Chase, no less.

It has a balance total of $141.

If I pay off $40, making my new outstanding balance $100, Chase will, ahem, chase the balance to $101.



TheVibeRAIDER said...

Oops, I just noticed my math mistake. LOL!

Another beer should fix that!

Here we go: My new balance will be $101.

Then Chase will chase me down to $102.



Jen said...

Well, CM, you certainly know when I'm working from the office or from home :) haha!

While I hate using the phrase 'sucks', sometimes I think it's the most descriptive. ;) Having your balance chased is on of those things that you can't stop (though I would suggest a quick call to a CSR) and affects your FICO. Unfortunately, paying your balances down to zero is easier said than done.

As I'm fond of saying on CB : never underestimate utilization.

GlobCredit.com said...

Virgil, it's doubtful you'd get chased that low. The people who should worry most are those who have significantly higher balances. And slow payers. Those are the people who will be most at risk.

GlobCredit.com said...

Jen, easier said than done. For sure. Balance chasing really does suck. No two ways about it.

savemanatees said...

This might be OT but I wanted to follow up on the poster, Drew's comment yesterday about CM's advice and the word simple.

I've had two BIG YAHOO moments today. First I was approved for a $20K HELOC @ 4% at my CU today (I set the max...I could have been approved for double). It went smoothly as I was prepared with ALL the docs needed to get the app to underwriting. Not only was I approved my GA home appraisal came back at $125,500. I paid $50K cash for it.

The second big YAY is my house in FL is officially under contract. I paid $118,000 in '98 and I have a $90K mortgage. It is under contract for $220K (low for the 'hood). The buyers want to close by 11/15. I know the house will pass inspection because it was completely remodelled in '03....and that included some infrastructure probs. The roof was replaced, new air/heat Carrier Puron, kitchen cabinets refaced plus all new appliances. Large whirlpool and shower in master with separate vanities....it is a 3/2.

Now to get here was NOT simple....there was a time in early 2005 I could have sold my house in FL for close to $400K....but I learned a long time ago that your home is your home....it should not be loooked at purely as an investment. Back then I would reply, "Great..then where do I move to?" In the old days a 12% ROI on a home was considered great. I moved from home purchase to home purchase using the equity as downstrokes....it worked on upsizing and even better when I was downsizing.

With all that said...it was NOT simple. I never acumulated unsecured debt that I could not handle, I kept my head when all around me were losing theirs. I learned to differentiate need from want. I limited buying things on credit that depreciated quickly....like furniture. I kept a tight credit belt when all my friends were spending like crazy. Driving my van instead of trading it in for an Audi or Lexus.

Now is my time to reap my justly deserved rewards for the sacrifices I made. My HELOC will be an investment in my GA home. The labor will be cheap. My equity in FL home goes to retirement funds.

Was this simple? NO, NO, NO....it took discipline and lots of sacrifices for a planned future goal.

Therefore CM's post should be looked at in the grand scheme of things. Much like CB's TOS states...it is not a democracy. Well neither is CC's policies. In the future you will have to earn credit the hard way.

IMho, if I were a CC exec I would be looking to save the company and my job....if that means sweeping CLDs and chasing balances....so be it. Sorry...credit is a privilege and not a right.

GlobCredit.com said...

Thanks for the post, Manatees. Your last comment, "credit is a privilege and not a right," resonates with me.

I wrote an American Express piece a few weeks ago where I said that I respect Amex's right to FR people. I just didn't like the way they went about doing it. But credit is a privilege and not a right. As a result, I have no problem with lenders doing periodic checkups.

Congrats on the new HELOC. And congrats on the pending sale of your home.

savemanatees said...

Heck...I didn't like the way LKH banned me from CB years ago. I rejoined.

When AMEX figures out what it wants to be in its next life....the loudest complainers now will prolly be the first to jump.

Sometimes nasty measures are called for....yes I think finding out AMEX CLD'ed you at the POS sux. But right now I have stood in lines behind people who have pulled two to four cards before theyget an authorization.

I'm like you...AR...I check mine now every 2 days. Now that I have my HELOC...my CLs don't matter so much to me. $20K @ 4% is just my kinda' easy to live with secured CL.

GlobCredit.com said...

Manatees, you're definitely looking good these days. No argument there.

You know all of this stuff is cyclical. People hate Amex today; they'll eventually love them again. People, including myself, have short memories.

Anonymous said...

Not entirely true that higher balances are targeted. Example: about 6 mos. ago my JC Penney limit was raised from $300 to $400. My Oct. 14th statement stated the same limit. A letter written on Oct. 27th said my limit was being lowered to either my current balance (which is $28+)or $100 whichever is greater. This letter was written by GE MoneyBank which handles Penney's credit cards and they said I could not handle the responsibility (this after about 25 years).

GlobCredit.com said...

How about this, then: generally speaking, companies are more likely to target higher balances (since they represent more risk).

I hope no one got the impression that I believe people are immune if they keep lower balances.

Keep balances -- of any size -- at your own peril.


Anonymous said...

I wish I had found this sight earlier.

GlobCredit.com said...

Anon, welcome. I have a feeling I know where you're coming from. I've been monitoring my traffic today and I've seen a lot of inbound links from sites that I've never seen before.

Welcome to the site. I hope you'll stick around. It's never too late to learn about stuff you wish you would have read earlier.

Anonymous said...

OK, so I'm snowballing my debt. I've called all my credit cards, and most of them lowered their interest rates a couple of points.
Then I call BofA, who I've had a card with since 1991. I have a $16,600 limit, a $6200 balance and an interest rate of 15.74%. Way higher than my other cards! I ask about a lower rate...basically they said because of my debt level I didn't qualify for a lower rate. I tried to push it a little, tried to get him to work with me...he starts talking about a payment plan. I had no idea what that was about and asked him to explain.He asked for some budget numbers, then said if I closed down the card, the monthly payment would be $130/mo (I pay $145 now) and the interest rate would come down to 9%. I asked what the downside was...he said it depends on who is looking at it. I told him I didn't want to do anything that would negatively affect my credit rating. He said the credit report would show that I had closed down the account and was on a payment plan.
Oh, and to hold my info he said he had to lower my credit limit to $6500, since I wasn't using the card anyway...huh? Well, the baby was crying so I was in a rush to get off the phone and didn't really question it.
Later, I started doing some research about this whole thing and realized I had inadvertently agreed to something I shouldn't have. And when I called back to undo what I had done they said my debt to income ratio made it impossible to reinstate my previous credit limit. I feel like I was completely blindsided!

So my question...
(I am ticked off at the whole situation)

Do I pay it off and close it down due to their shoddy treatment of me?

Do I participate in the payment plan even though I HATE the thought of doing business with them at this point?

I plan to pay this off within the next 6 months, payment plan or not.

I just can't believe I've been penalized for trying to be proactive!!!!

GlobCredit.com said...

Lots of issues here, Anon.

First, try to avoid them closing your account and putting you on a plan. It will lock in your rate, but, as you just learned, they're going to make a notation on your report that you're in a repayment plan. Additionally, once your account is closed, don't be surprised to see your credit limit reported at $0. It doesn't take a genius to figure out what happens from there. With a $0 limit -- and a $6500 balance -- you'll be 100% maxed out for FICO purposes. Ouch!

Additionally, you're only saving $15 a month by being on the plan. Keep the account open and just pay it off on your own. Screw the plan.

What's more, with the plan, you would pay $560 a year on the balance of $6200 (assuming you didn't pay a dime of the balance -- and it accrued all year long). Of course, I am just using this for illustrative purposes, but you can see how much interest you would pay on a $6200 balance (at 9% a year) if it remained at that balance for an entire year.

Without the plan, at 15.74%, you would pay $975 a year in interest. The plan saves you $415 for the year. Given all the trouble you've run into today, I think you'd agree that it wasn't worth the $415 savings.

By chance, did you talk with an analyst earlier today? Is that who was pushing the payment plan? Where does the account stand right now?

Given that your new limit is $6500, and your balance is $6200, you're gonna lose a few points next month when this gets reported to the credit reporting agencies. Your card is essentially maxed out. That's the sucky part.

It's kind of tough to unring the bell on this one. But, given that you have nothing to lose at this point, I would call back and see if you can get the limit restored. I know that you've called back already, but try it again. Explain to whoever you speak with that you were totally confused by your earlier phone call today. You didn't understand what the person was talking about and you agreed to a lower limit.

Now that you've done some reading, you realize that it was a bad decision. You want to get the limit reinstated. If they bring up the payment plan thing, just say that you never wanted a plan to begin with. You were calling in about a lower rate and the person tried to sell you on some sort of plan.

Act dumb if necessary.

See what happens. Get back to me and let me know.

parttimegenius said...

Hi CM - LOVE the blog!

So let me see if I get this straight:
- CC issuers are targeting this "chase campaign" on those who carry high balances and are slow to pay them off. But isn't this who their fave customers are? I thought they hated "deadbeats" like me?!?!? I knew this was going on from all the threads on CB and word around the water cooler but I'm suprised to learn its particularly affecting those who carry significant balances and don't PIF whereas until now, I thought they were slashing to minimize risk in their portfolio. I would think those carrying high balances were keeping the lights on at the bank in these tough times.

GlobCredit.com said...

PTG (you sure you're not a full-time genius?), I'm a deadbeat (I pay in full, just like you). Revolvers, card companies' bread and butter, are what sustain the credit-card industry.

Now that companies are finally being forced to do some real underwriting and risk management, they're going after customers who are slow to pay, keep high balances, etc.

My guess is that they'd like to lower the limits even more on these customers, but they can't go lower than the current balance.

Going forward, I am convinced that card companies will make their money by charging higher fees -- on everything. I've already noticed card companies raising their rates for balance transfers, late payments, over the limit, etc.

Pentagon Federal, one of my favorite credit unions, just recently announced that its balance transfer fee will go from 1% to 2.5%.

Sign of the times and all that.

Anonymous said...

Banks are chasing "small potatoes" accounts as well. Case in point - GE MoneyBank (JC Penney and Dillard's card holders among others). I had a $400 limit - outstanding debt less than $25 - got letter saying I could not handle the responsibility of the $400 credit limit and they reduced my limit to $100. Needless to say, my business will go to other retailers.

GlobCredit.com said...

Anon, yep. They are chasing balances of all sizes.

But I would not call yours chasing the balance. If you had a higher balance, that you were chipping away at each month, and the bank continued to reduce your limit to right above your new balance, then we'd have chasing the balance.

Here, though, we just have GEMB cutting your limit for whatever reason.

I'm pretty sure you were struggling to pay off your $25 balance.

Anonymous said...

I am so upset I could scream. Really. I make excellent money (over $100k), pay my bills on time (depsite S&T), own my home and yet Amex slashed my credit line to just $100 above my balance. So now my FICO will suffer. And the worst part is, they sent me an email to tell me after the fact. I didnt even have the option to cancel my cards before it took effect. I have since cancelled my cards (out of pure anger). And now, it looks like I have a High Balance and a Low Available Credit. Both are bad for your FICO. Hate Amex. (I have read about their profiling where you shop and zip codes you live in if in areas of high forclosure rates etc. Where does Ken's staff buy his laundry detergent I wonder- hope it's not at Costco! LOL)

GlobCredit.com said...

Anon, that's the crappy part about these credit limit decreases. You don't get a chance to opt out. The card company shoots first -- and then notifies you. Just another reason for cardholders to check their limits before they head out to shop, etc.

It's obviously too late, but I never recommend closing cards in anger. You'll often come to a different decision if you refrain from making one for a few days.

I wrote a story on that, actually: http://GlobCredit.com/2008/08/when-it-comes-to-credit-its-always.html

Anyhow, get that balance paid down as soon as you can. FICO isn't enjoying you right now.

As for Ken and his peeps, not sure where they are buying their stuff. But I imagine that they all have the American Express Immunity card. Don't leave home without it. : )

Anonymous said...

Chase Credit and their First USA Credit have yet to send me any notification that they have chased my balance back in November!!!!

Is there any legal recourse for that?

I mean, I monitor my balances, limits, purchases, payments....all on line so I saw the decrease and it has been over 15 days at least that I have not received any notification of such action.

GlobCredit.com said...

Anon, there are many rules, but if the decision to reduce your limit was based on information in your credit report, Chase must provide the reasons to you. I don't see a hard and fast rule about the timing of the notification, though. Note that the lender can notify you via an oral communication, electronic communication, or via a letter through the mail.

Here is the actual rule:

§ 615. Requirements on users of consumer reports [15 U.S.C. § 1681m]

(a) Duties of users taking adverse actions on the basis of information contained in consumer
reports. If any person takes any adverse action with respect to any consumer that is
based in whole or in part on any information contained in a consumer report, the person

(1) provide oral, written, or electronic notice of the adverse action to the consumer;
(2) provide to the consumer orally, in writing, or electronically

(A) the name, address, and telephone number of the consumer reporting agency
(including a toll-free telephone number established by the agency if the
agency compiles and maintains files on consumers on a nationwide basis) that
furnished the report to the person; and

(B) a statement that the consumer reporting agency did not make the decision to
take the adverse action and is unable to provide the consumer the specific
reasons why the adverse action was taken; and

(3) provide to the consumer an oral, written, or electronic notice of the consumer's right

(A) to obtain, under section 612 [§ 1681j], a free copy of a consumer report on the
consumer from the consumer reporting agency referred to in paragraph (2),
which notice shall include an indication of the 60-day period under that
section for obtaining such a copy; and

(B) to dispute, under section 611 [§ 1681i], with a consumer reporting agency the
accuracy or completeness of any information in a consumer report furnished
by the agency.

If the adverse action was based on a third party -- or affiliate information -- the credit-card company is bound by this language. Notice that the onus is on the consumer to request a reason if the card company relies on an affiliate or third party:

(b) Adverse Action Based on Information Obtained from Third Parties Other than Consumer
Reporting Agencies

(1) In general. Whenever credit for personal, family, or household purposes involving a
consumer is denied or the charge for such credit is increased either wholly or partly
because of information obtained from a person other than a consumer reporting
agency bearing upon the consumer's credit worthiness, credit standing, credit
capacity, character, general reputation, personal characteristics, or mode of living, the
user of such information shall, within a reasonable period of time, upon the
consumer's written request for the reasons for such adverse action received within
sixty days after learning of such adverse action, disclose the nature of the information
to the consumer. The user of such information shall clearly and accurately disclose to
the consumer his right to make such written request at the time such adverse action is
communicated to the consumer.

(2) Duties of Person Taking Certain Actions Based on Information Provided by Affiliate

(A) Duties, generally. If a person takes an action described in subparagraph (B)
with respect to a consumer, based in whole or in part on information described
in subparagraph (C), the person shall
(i) notify the consumer of the action, including a statement that the consumer
may obtain the information in accordance with clause (ii); and
(ii) upon a written request from the consumer received within 60 days after
transmittal of the notice required by clause (i), disclose to the consumer
the nature of the information upon which the action is based by not later
than 30 days after receipt of the request.

GlobCredit.com said...

Anon, I would call and request a letter from Chase.

Anonymous said...

Unbelievable. After telling BofA "NO!!!" to the payment plan, I received a letter saying "Congratulations on being accepted into our Special Repayment Program!" Obviously, I'm on the phone right now telling them "No" again. I am sooo frustrated with them. They make my blood boil! They treated me so badly after my last phone call I was hoping to just pay down my debt and never have anything to do with them again. And now this.

GlobCredit.com said...

Anon, geez. Let me know how this turns out. Sounds like a customer-service rep trying to cram this down your throat. I would not be surprised if the rep gets a commish for every person who signs up for one of these.

Anonymous said...

If you already have several credit cards (5) and are about to pay off one or two, it looks like you DON'T recommend closing them, which is what I was going to do. Are you ok to pay off the one or two and just leave them open or are you better off paying larger balances on all 5 for the next several months instead of paying any off? AmEx did lower our limit from $20,000 to $10,600 which was about $1,000 more than our balance at the time.

GlobCredit.com said...

Anon, the rule of thumb is that you do not close cards that you've paid off. Just allow them to remain open. Use the cards sparingly -- and pay in full on those cards.

My thinking is that you attack the high APR debt first. It's the stuff that is costing you the most. However, if you are talking about some small balances on some of the cards, feel free to pay those off. Then start attacking that high-interest debt.

Anonymous said...


Anonymous said...

In the last three months I have had 2 CCs lower my limit. I am a single mom and live on a tight budget so I thought it was smart to take a chunk of my federal return and pay off half of two balances: figuring I would have the available money if I needed it. Now they lowered my limits to match my balances and I have no money or available credit-now that sucks!!

Anonymous said...

Hmmm - I don't fit your profile of "chasing the balance"... but AMEX sure did just that!
I have three AMEX cards - a blue, an optima, and a platinum. Blue and Optima had 25k ceilings, no balance, no useage in two years. Platinum has no spending limit, is paid in full monthly as required to the tune of about 50K per month. I have been a member for 30 years, a credit score of 780, as does my husband. Income is 7 digits in front of the decimal point. Monthly bills are auto paid by the bank and amex.

I get a "personal" phone call from "amex" stating the blue and optima ceilings are being reduced to 8k each. I ask if this is amex or a rep for amex. Start the merry-go-round. They did not want to answer. In the end, the most I could get was they were "representing" amex. It was shortly followed by a confirmation letter on amex letterhead to both accounts.

Thus far on my and our monthly credit reporting, it has not shown a negative. However, the "piss-off" factor of having my loyalty returned in this way is gargantuan. What it did effect was my private citibank accounts visa card. My rate went from prime plus 12 to 38%!!!! Just found that out this evening. While looking to see what others were experiencing as I surfed, found you instead. You will know how I got here - that's interesting - can't remember where i started but...

On another amex front, while travelling this past year, I missed one of those platinum pay dates by a few days and paid it in full. No credit report issues BUT amex removed my "privilige" to use sign and travel (and punt balance portions over to an interest acruing sidebar to the platinum). Have had it always. They promised if I paid off the balance, it would be restored. I did. In excess of 100K. They renigged on their promise and refuse to reinstate the sign and travel.

Justification? "Late on one payment" and a "negative credit report". In 30 years? Stop the presses! My score of 780 apparently tarnished by a - get this - $12 (yes, twelve dollars) dispute with a physician FOUR years ago over an insurance payment. amex will not budge on this. This is a yearly event for us - punt some to sign and travel thereby increasing monthly cash flow and at bonus time paying it off.

So what gives? Oh yeah - almost forgot - - must be the regularl shopping at walmart and target for household supplies, tjmaxx for the teenagers, and thousands at boutique stores apparently do not set it off. go figure.

Before reading your blog, I attributed it to amex decreasing their debt ratio. Now not so sure. There is no reason to target me. So if it makes anyone feel any better, apparently it doesn't matter what fico, income, gratuitous and timely payments mean to these companies.

For those of you who will look at these numbers and say - yea she has problems that rich b**** - no fair. Not that I should feel compelled to justify but - we had student loans like a lot of other people for professional degrees that didn't get paid off until we were in our 40's, started in section 8 housing as that was all we could afford. In other words, got it the old fashioned way - hard work. Hope that rests those eyebrows off your head. Just wondering with this additional info what their real targets are????

GlobCredit.com said...

Anon, you sure are correct. You do not fit the profile. However, AmEx is still targeting customers who live in the wrong geographical area and work in the wrong industry. Think California and Florida for bad places to live. Think banking, real estate, and construction as very suspect industries.

You pay in full each month. AmEx is not chasing your balance. Instead it is simply cutting its exposure to you.

Nothing you did; this is an AmEx issue. I know several readers who fit your profile, by the way. They've cut bait and started using other cards. In other words, they've told AmEx to kiss their collective asses.

Thanks for visiting the blog.

Anonymous said...

WOW - I'm impressed! Also lmao. Your blog(s) which I have been scooting around in for the last bit is phenomenal! Feeling shorted from only being true to a daily dose of Tarranto (WSJ). Impressed too at your quick and witted answer. Thanks!

Anyway - in response, geo area is just outside NYC. Housing prices are down 8% (from years of price gouging, it finally begins to rectify itself). Crime and unemployment rate essentially zilch. Foreclosures few. Industry for us is law and medicine.

Cutting exposure? Isn't that like biting the hand that feeds you? I only use the amex platinum and rarely citibank and have no other credit cards other than mentioned.

Cut bait and kiss my ass? My husbands words exactly. Checked around. Given that I whittled away and closed all other accounts at consumers request as we paid them off over the years, and amex showing our "high limit" of credit well over a 100k, I was told that closing them would have a negative impact on our credit report (financial advisor).

Last year, asked for and received a credit increase from citibank (ouch is the reponse now with rate hike)and the consequential drop in my credit score for having a credit check run makes me wonder if attempting any new cards at this time is a good idea??? Credit offers come almost daily. What was hovering around 7.99% is now coming in at 12.99%. And if i do - is it wiser to apply to several at once as opposed to one considering the impact on credit report?

Truth be told, I like that freaking platinum card. Despite the fee to carry it, the perks are helpful and the customer service for the most part over 30 years is far more positive than otherwise - if directly from amex and not one of their hoochies. It opens doors wherever it travels. Turns out the only place I ever really need the citi visa is in mom and pop stores because of amex required chunks of profit to offer it. A bigger bonus is that paying it off every month means I own it. Keeping purchases and payments on one card easier for accounting and tax purposes.

In the very near future, my sister and I will become entrepeneurs and fully intend on offering amex as a source of payment. We believe it to be prudent.

However - even if the problem is an amex issue as you state, I cannot fathom a company that does not bend over at least partially to accomodate its loyalists. To have it returned this way is egregious. So yeah - I wanna tell them to kiss my ass but it would be like spitting in the ocean. One momentary ripple, cya, goodbye, no tears. Crimony - is there such a thing as co-dependence on a credit card name? HA!

Oh - almost forgot - asked amex about their version of my "negative credit report" from above post. They told me to get one and send it to them as proof. I said - why? you guys check it constantly and already know and can see it. blah blah blah wasted my breath, she had no other answer. A few choice (yikes!)words and slamming down of the phone never felt so good. Maybe that's why??? A bitter customer rep? Perhaps not so far fetched...

Be well and thanks for your offerings

GlobCredit.com said...

Anon, you and I are going to get along very well. You have a great attitude. I love it.

Let's start from the bottom. Take everything you hear from customer-service reps with a grain of salt. I get readers who show up here from time to time with information that's contradictory to something I have reported. They often get this information from customer-service reps. Some of the reps are clueless. Call back and you'll get a different answer. Call yet again and you'll get another answer. Dialing for dollars, I call it. Sounds as though you got a bitter CSR. I have not been with Amex for a long time (nine months) but I have had solid customer service.

In the meantime, morale must be low at AmEx these days. Even though AmEx has not been cutting staff in customer service, you have to think that those employees are wondering when that will change. Some of the customer-service reps are probably just stressed out.

Having said that, forget loyalty. That's gone. AmEx has proven during the past year or so that loyalty is no longer -- if it ever was -- part of the culture at AmEx.

If you're getting more out of that card (platinum) than you're putting in, keep it.

You still don't fit the profile of someone who should be suffering adverse action. As such, I won't even try to figure it out. I don't know the inner workings of AmEx. I'd go crazy trying to figure that organization out.

As for getting some new cards, do you have any credit-union relationships? I can tell you that I have two. I have been very happy with both. Neither have pulled any stunts during the downturn. Here is a story that I did on credit unions (written in July): http://GlobCredit.com/2008/07/why-you-need-credit-union-relationship.html

And here is a story that I did on Pentagon Federal Credit Union (originally wrote it in July; updated two months ago): http://GlobCredit.com/2008/07/looking-to-combat-high-gas-prices.html

In this credit environment, it's tough to strategize. The rules have changed. Read those two articles. If you're interested in Pentagon, you should go for it. If you haven't applied for a lot of cards during the past year and you don't have a bunch of inquiries (and your debt-to-income ratio is low), you'll be a good candidate for that Pentagon Cash Rewards card.

Thanks for writing. And thanks for reading the blog.

Bank of America is Satan said...

When CM says take what customer service reps say with a grain of salt, he's absolutely right. It's not always the CSR's fault, though. They're told to mouth the company line and offer supplemental products -- or be fired. CSRs are not really valued, they 'cost' companies money instead of bringing revenue in.

When possible, record all calls.

GlobCredit.com said...

Let me echo BofA is Satan's comment. These CSRs are instructed on what to say. You can't always blame them for the script.

Anonymous said...

When you say Am Ex is one of the worst, you are correct. I have a platinum Optima card with them. In Nov., my limit was $49,200 and my balance was $32,275 (VERY high, I know, but the important thing is I'm working to pay it off).

Got a letter stating they were cutting my limit to $33,400, essentially upping my utilization rate to close to 100%. The rate at that time was 5%. I was actually not too upset with the line decrease, as knowing I couldn't use the card anymore, I could pay it down faster, but I wasn't happy that my credit score would take a hit.

So each month I paid the minimum and then some. Because the rate was low, I was paying it down faster than I would have at a higher rate.

Come Feb, and my balance is now a couple thousand less. I get a mesasge from them stating I need to call about a change to my account. I do, and they tell me that they have AGAIN reduced my credit line, to 32,100, once again not much above what I owe. The rate now is 4.25%, and I fully expect them to reduce my limit again, as my limit goes down. I think its sneaky that they reduce it to just enough so you won't incur any over the limit fees, but it plays havoc with your credit score. I'm afraid to call them for anything incase they noitce my low low rate and change it!

GlobCredit.com said...

Anon, sorry to hear about your plight. But you're right. AmEx will likely slash your limit all the way down. Your account will continue to be maxed out. FICO will not be pleased. Oh, well. Just keep paying that balance down.

Good luck to you!

Anonymous said...

I plan to, and Am Ex can kiss my you know what. I also have a green rewards card with them, and just paid off a small balance on that. They've also nicely let me know that they wouldn't allow any more purchases to be paid over time. Fine by me, and that's the only card I really use, for some bills, and pay it off monthly. I only use cash now, except in cases where I know I can pay anything I charge in full, when the bill comes. I didn't get into mucho debt overnight, and I can't pay it off overnight, but I can stop using my cards.

GlobCredit.com said...

Anon, sounds like you have a plan.

It will be a grind, but you'll get there. Congrats on resolving to pay it off and keep it off.

Melanie Haiken said...

I'm late to the train on this, but I found this post and it explained balance chasing better than anything else I read. I linked to you on my blog:http://www.caring.com/blogs/caring-currents/getting-out-from-under-debt-todays-family-challenge
If you have any other suggestions for folks in this bind, I'd love it if you'd comment.

GlobCredit.com said...

Melanie, I don't have a lot more to add. Fact is, if you have a balance, you're at risk. My only suggestion is to pay down these balances as soon as you can. But, as you pointed out in your blog, that won't necessarily save you. The card issuers are aggressively going after customers who carry a balance.

If you don't carry a balance -- don't start. If you are carrying a balance, get rid of it as soon as you can.

Thanks for visiting the blog, Melanie. And if you ever have any credit questions, feel free to shoot me a note at plastic101@gmail.com. I'm always around.

Anonymous said...

Wow, what is this, 1980? (link here) I'm so glad you decided to educate us on hyperlinks every two seconds (link here) because if you didn't, I might not understand I can click on those links (link here)

Thanks again for the education (link here)

GlobCredit.com said...

You're welcome. I've always found that, at least on my site, that it can be tough to see some of the links. That's why I sign post them.

Anonymous said...

So..... let me get this straight. You acknowledge a design flaw with your website, and instead of making a CSS change, you decide to just explain when you're posting hyperlinks.

Wow. (link here)

GlobCredit.com said...

Haha. Not quite. I am saying that when I view the pages, it seems tough for ME to see the links. Maybe if I am having trouble -- others are having trouble.

It's nothing more than that.

GlobCredit.com said...

Actually, come to think of it, I just checked on IE and the links are easy to see (without the signposts). It's FF that seems to give me trouble.

Probably a design flaw with me; not a design flaw with the site. :)

How about you? Any trouble seeing the links?

GlobCredit.com said...

Hey, you know what? Just taking another look at it -- with a different computer -- things look OK. Maybe no need to have those sign posts. The blue is pretty vivid on the links.

I'm gonna stop using those sign posts from here.

See? You actually helped me out here! Your style isn't exactly endearing -- but it was effective nonetheless.

GlobCredit.com said...

Hey, anon, I have yanked all of the (links) from the stories on the front page of my blog. If you wouldn't mind, let me know how it looks to you.


Nichole said...

We have excellent credit and had a limit of $8,000 for our AMEX. We only had a balance of $3,000 on the card. Well today we got hit by AMEX. They lowered our credit limit to $4,300. No reason other than to say, "Given today's difficult economic environment, all of us need to think about how we control expenses and reduce risks. At AMEX we want to be a responsible lender during prosperous times and more challenging ones. This means carefully reviewing the spending and debt profiles of our Cardmembers - and making some difficult decisions. Unforturnately, that's why we're writing you today."

We have excellent credit scores, above 750 and never been late on a payment and alway pay more than the minimum due. So I don't see how they see my credit utilization since it hasn't changed. We have not added anything to our credit cards.

This is crap and someone needs to step in and do something about it. We're being treated like we have 600 credit scores. We've worked hard to get our scores where they are and have maintained that level for over 7 years. This is crap and AMEX can kiss mine...

Anonymous said...

Don't ever talk to a rep if you can help it. It just flags your account for future changes.

Anonymous said...

Here is what I did-- BOA and Chase kept lowering my balances, even though I have never been late, never had any problems-- still, the limits would get lower and lower. So, against all credit advice, I opened a Capital One card, transfered any balances from BOA and JPMC (Cap One offered a 0% interest for a year, 3% one time balance transfer fee). I transferred the balances, paid the card off and closed, yes closed the BOA and JP Accounts. I figured, the small hit to my credit score by closing them wouldn't hurt, as they already hit my score by dropping the limits. Not only did Cap One help 'bail me out' or the big commercial banks, they increased my limit! I also moved all my money from 'big banks' to ING Direct. No fuss, No muss, and in my own way, told the big banks to kiss it.

Anonymous said...

Anonymous,since you seem to be the one with all the answers, I need some help........

I had a high balance of $12,421.19 on my BofA credit card with a maximum credit of $12,800. I currently do consultive real estate finance work after loosing my job earlier this year, and today I made the mistake calling up BofA w/o reading your blog. Anyways, they connected me to their Credit Dept. and I made the mistake of telling the credit rep. that i'd been collecting unemployment for two weeks. Immediately, much to my chagrin, he cut my limit to $10,800 when I just paid a $2000 payment yesterday to get my card to $10,421.19. From reading the article, I know that this is dangerously close to the utilization, and asides from having a credit card w/ BofA, I bank with them with both my check, savings account my myself and my business. My balance in my savings account is at about $5000, and I receive roughly $1800 a month from the state. The only payments I have is a $250 student loan payment, and a $125 payment on a Capital One Healthcare credit card. Also, I have additionally income coming in from overseas that I don't report, so I know that I can make at least a $1000 payment. I rely on my credit card heavily, because I don't like carrying cash. Do you think I should do a balance tranfer to another company, i.e. Mastercard? (I currently have a VISA). My FICO score is 760 plus. Please advise. feel free to e-mail me to: Rjd8306@gmail.com.

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