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Hi,
Mr. Bilker! I'm a big fan but
would like to share and get your opinion on what happened to me when
I balance transferred several accounts. I'm also a credit junkie so
am very aware of the status of my credit reports. FYI, my credit
reports have no negative accounts , and I want to emphasize all my
payments are on time and I never go over the limit.
I paid off many higher-interest
rate cards with some of my lower rate and 0% offers. When I did,
instead of having several cards with less than 50% usage, I had
several cards with 0% usage (the higher rate cards) and several with
70-85% usage (the lower rate cards).
What followed was a dramatic
decrease in my credit score of 60 points due to "using at least
50% of credit limit on 5 credit cards." This drop caused alarm
in the "risk" department at American Express as they
decided to cancel my extended payment option though my 2 cards with
them were left open.
I realize you have so many cards,
this situation probably didn't impact you, but it has definitely
impacted me. I thought it was important to note that even when my
overall credit ratio usage went down and is considered positive, the
fact that over 50% of the credit limits on several accounts was used
resulted in such an extremely damaging score drop.
My question is this: Have you
dealt with this situation with your clients and what have you done,
if anything, to deal with it?
Again, thank you very much! I hope
to hear from you soon!
Carol
Carol,
Thanks for writing!
 First
off, I want to let you know that you're on the right track by paying
off your high-interest rate cards with lower-rate offers! I also
don't think you're a "credit junkie" because those words
create an image of someone who uses their credit lines for frivolous
purchases. You're using your credit power to save money and take
control of your finances!
Credit card banks are always looking
at your credit report. They say that they want to make sure that you
have the same credit standing as you did when you opened the
account. If they find that you don't, they'll change your terms and
raise your interest rates as a penalty. I see this as simply another
excuse for banks to collect more money from their customers (or
victims
that don't read the fine print or complain)! I talk more about this
in an article titled Penalty
Rates.
In your case, you rearranged the
amount of debt on each card without changing the total debt. And,
American Express penalized you. Well, it's time for them to learn a
lesson!
Give them a call and tell them that
you want the extended payment option back on both cards. I would
say, "Here's the deal. I have many other credit cards to choose
from to spend my money in interest charges. I bet they'll love some
new business. In fact, I'm seriously considering canceling all my
American Express Accounts unless those extended payment options are
returned to my accounts, pronto."
If the first representative you speak
with says they cannot do it, then ask to speak to their supervisor.
If the supervisor doesn't do as you ask, then I would transfer my
balances to the other cards, and close the American Express
accounts to teach them a lesson.
Of course, you'll want to call your other
cards and say, "I'll transfer my balances today from my American
Express card if you give me a nice low-rate transfer offer. And
while you're at it, why don't you raise my credit limit."
American Express needs to understand
that you have other options. You don't have to accept their terms.
You can go somewhere else and do business with other banks.
Good luck and please let me know what
happens!
Regards,
Scott
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