My first credit card was American Express (NYSE: AXP) ... when I was doing my undergrad at The University of Texas at Austin in late eighties & early nineties. American Express offered me a credit card, and I accepted their offer for three reasons:
1. Indians don't like to owe money, and I loved the fact that you have to make your monthly payment in full for the American Express card.
2. American Express offered round-trip airline deals with Northwest Airlines for $99 anywhere in the U.S. within defined zones (and I used this offer a few times and enjoyed every bit of it).
3. Auto insurance coverage. When you rent a car with the American Express card, you did not need to buy additional auto insurance. And I loved this feature.
Those were the early college days, and I was definitely proud of being the American Express card holder, and never left home without it!
Fast Forward
My current American Express card is the American Express for Business card. I have had this card since 2001. I was a proud member, and always got a thrill out of watching the Seinfeld commercials... And I was enjoying the services of my card until recently...
During the last three years, I began carrying a modest balance on my card owing to growing my startup business, and having accumulated some debt from moving & related expenses (we moved from Fremont, CA to Irvine, CA in 2007).
I have always been making my monthly payments on the card, and for a period of one year to eighteen months, I even enrolled in their program wherein I made the required monthly payments that helped reduce the overall balance without incurring any interest expenses (the only downside was that I could not use the card during this period).
However, I am no longer in this program, and have been making more than the required monthly minimums, and am beginning to focus on growing my business...
What does American Express do? They add "insult to the injury" by taking away my credit... so in essence, after my working hard to reduce the balance, and creating an available credit in the thousands which could have helped me grow my business, American Express just arbitrarily cut my entire available credit. In essence, American Express "expressed" that I cannot use their card for any new expense. Even though I have been making more than the required minimum payments on time.
Leave Home Without It
Thank you American Express for this years of loyalty and customer service... I am no longer a proud member of my American Express card, and I am going to leave home without it! I no longer find a need for your credit card, and rather than you forcing the issue by reducing my available credit and not letting me use the card, I have decided to not use your card entirely... and oh yes, I will be mailing your card back to you "cut in half" of course... and I will talk about my experience to my friends & business contacts.
Why Innovators Fail?
American Express has been an innovator for over hundred and fifty years... however, the current economy and recession has put this innovator to test. And whereas American Express has been doing well and turning around financially, I am sure that loyal card members of American Express have felt the pinch and have had to bear the brunt wherein their credit lines have been reduced or eliminated altogether... One can argue that American Express is doing the right thing for the shareholder... however, is American Express doing the right thing for America and the American business? They ought to be helping the small business, and helping them grow... Today I have some unanswered questions...
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Update:
Here's the ho-hum response I got from American Express on July 7, 2010:
Dear Sanjay Dalal,
Thank you for writing in.
I understand your concern regarding the reduction in the line of credit on your Card. I would have liked to help you with the reason of the reduction or any other information regarding this, but unfortunately, we at Email Servicing do not have access to this information.
I have checked your account and see that the line of credit has been reduced by our Account Services. I would therefore request you to contact our Account Services Team at 1-800-842-5303 (24 hours/ 7 days) and they will be able to explain the reason for reduction. If you are outside the US please call collect at 1-336-393-1111.
If there's any other we may be of assistance, do write back to us.
Sincerely, Shruti Tandon Email Servicing Team American Express Interactive Services
Later, I had a conversation with American Express Account Services... Here's a gist of the conversation:
1. Their primary reason for reducing my credit line without informing me was a drop in my Experian credit score! And they offered to send me the Experian credit report (which I already have access to. I have already disputed a few items on my credit with Experian).
Update July 16: It appears that the real culprit could be Experian! I went to US Bank to open a new business account and obtain a business line of credit. I opened the business account, but when US Bank pulled my credit report, they were shown a credit score of only 589 from Experian. I told the business manager that my credit score has never been below 600... I was not satisfied with the explanation given while I was there. I pulled my own credit report from Experian the very same day in the evening, Experian gave me a score of 671. Thus, there is a huge disconnect between what Experian tells me what my credit score is, and what Experian tells the would be lenders such as Banks and Credit Card companies. Even the US Bank underwriting department was surprised by this disconnect. They have denied me credit based on the lower credit score reported by Experian to them; however, when I showed them my own credit report provided by Experian on the same day that shows a much higher score, they are not able to accept this. Now they are asking me to contact Experian and resolve this. Net: US Bank can't resolve this. American Express perhaps also acted in part due to what Experian reported them wrongly. Now, I need to get an answer from Experian and get to the bottom of this... Can't imagine why they will "mess" with a regular Joe...
2. My debt ratio (again based on the Experian report)
3. Some other mumbo-jumbo financial stuff...
Again, I asked them on whether my loyalty to American Express, multiple years of membership, my making payments on-time mattered... apparently it did not!
I told Account Services that the decision is mutual, and just as they decided to reduce my credit line and in essence stipulate my using the card, I decided to not use it at all...
We parted ways... she wished me good luck, I wished American Express good luck! An end of a chapter...
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