I'm a pretty savvy guy, so I never imagined that AMEX would be able to trick me into a bankrutcy. But they did.
I have been a loyal AMEX customer since 1980 - almost 30 years. I typically maintain approximately $250,000 in debt and, over the past few years, have been actively solicited by AMEX to make them my biggest lender. Big mistake!
As I have done hundreds of times in the past, I recently used a "convenience check" to make a $2,500 mortgage payment to my local bank. My AMEX account had at least $25,000 in available credit line at the time.
With no notice to me, AMEX decided to bounce the check and reduce my $200,000 credit limit by $200 (yes, two-hundred), claiming:
1. That I had too many recent inquiries on my account. Guess what? It turned out to be one inquiry by American Express last year when they called to ask if I wanted to increase my credit line!
2. That my credit report had a "serious delinquency, " which turned out to be a $56 Verizon billing error that they corrected that same day.
3. That they are not making enough money on me (yes, they really said that). Since I only use the credit as a credit line, they do not get the extra 4% merchant fee that they would get if I used the credit card to buy things. They don't make enough money on me.
I spoke to three AMEX supervisors over a 6-hour period attempting to explain that if the AMEX convenience check bounced, my local bank would take the mortgage payment (plus late fees) from my checking account. I also explained that the $2,500 debit from my bank account would cause my electronic payment to AMEX to also bounce! Catch-22.
Using their well-rehearsed lines, all three supervisors expressed sympathy but claimed no authority to do anything about it. They all swore to have a higher level manager call me back within 24 hours. It is now over 2 weeks and no call.
Natuarlly, my payment to AMEX bounced, prompting them to freeze my accounts, reduce my credit limit by another $600 (yes, six-hundred) and increase my interest rate by 10%! They were just waiting!
I do not have a credit line because I want one - I have one to allow my business to operate smoothly through seasonal fluctuations in cash flow. I cannot get a line of credit from anyone else without cancelling the AMEX line of credit and I can't do that without paying it off first. Catch-22 again.
A few years ago, the solution would have been simple - bankrupt out the debt. But the new Bankruptcy Code protects AMEX (and others) when they lend to high income borrowers. We are not eligible for a full chapter 7 bankruptcy - only a chapter 13.
But, no worries - I'll get even eventually.
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