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Amex canceled my 1,000 card


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1,000 Credit limit.

Never got an increase

Always paid in full each month..

No lates or anything.

Hardly used it.... I had an automatic $10 gym membership charged to it ever month which also got paid every month.

 

I did use it once recently for a $300 purchase. And again - I PAID THAT IN FULL. There is NEVER a balance on this card.

 

 

Letter says because of my debt to income ratio and because I have "severe delinquencies" which really makes no sense whatsoever to me because I at least pay the min payment on things... So I guess I'll be pulling a report soon to see what the hell that's all about.

Edited by LikeItOrNot
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"BEST OF BREED" would never close a $1,000 account

 

Yeah, if the op runs it up (bet they CLD real quick if someone tried to use too much of the CL) and defaults, that $1000 will push them over the edge. :blink:

 

I don't think they like low spenders right now - it costs more to maintain than they earn back.

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"BEST OF BREED" would never close a $1,000 account

 

Yeah, if the op runs it up (bet they CLD real quick if someone tried to use too much of the CL) and defaults, that $1000 will push them over the edge. :)

 

I don't think they like low spenders right now - it costs more to maintain than they earn back.

WHAT IS THE "REAL" COST OF AN OPEN ACCOUNT vs THE TOTAL LOSS OF 100% OF THE BUSINESS???

 

**CLOSED**

 

(be it $11.99 or $300 or $3,000 or $10,000 per month)

 

:blink:

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090224axp1.gif

 

BUMMER!

Be careful with your chart...I did the same basic thing and PEOPLE GOT IN MY FACE ABOUT IT

 

Well I should apologize in advance to the Amex koolaid-drinkers then: Sorry if the truth hurts! Your pet has done itself in.

 

And as to using the chart itself, people are welcome to google "fair use doctrine".

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"BEST OF BREED" would never close a $1,000 account

 

Yeah, if the op runs it up (bet they CLD real quick if someone tried to use too much of the CL) and defaults, that $1000 will push them over the edge. :)

 

I don't think they like low spenders right now - it costs more to maintain than they earn back.

WHAT IS THE "REAL" COST OF AN OPEN ACCOUNT vs THE TOTAL LOSS OF 100% OF THE BUSINESS???

 

**CLOSED**

 

(be it $11.99 or $300 or $3,000 or $10,000 per month)

 

:rolleyes:

 

They make less than $2 on the $10 autopurchase. The cost of maintaining the infrastructure per acct is about that much - add in the cost of a support call (should he need it) and amex is underwater.

 

Someone recently said it cost approx $50 to process/approve a new application. No idea how accurate that is but when i worked as a CSR 15+ yrs ago the cost per call was $1/min to talk to a CSR and the goal was under 2:30 min per call.

 

I believe multiple transactions would be better for them, but a min of $50/mo is probably breakeven for most lenders.

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I'm going to pretend to be your friendly Amex FR team member. Let's take a look at what you posted here so far.

 

You hardly ever use our AMEX card....we make no money this way.

If you did use it, it was mostly for your $10 monthly gym membership..........we make very little money here.

You always PIF, never carry a balance.....again, we make no money this way.

 

And for your purchases, every month was $10 gym membership and one time recently you spent $300 on your card. So let's just put a number on your total yearly transactions. This means you put maybe $500 on your credit card for the ENTIRE YEAR. And the only spot where they could make money off you during this time was the Transaction fees for those $500 in transactions. I'll just pick a number and say AMEX makes 3% per transaction in fees. So that would be about $15 made off of your transaction fees.

 

Now let me ask you this, if you had a client for an entire year, who made you $15 the entire year, would you go out of your way to keep that client as a customer? Would you keep them if you had 20 others in line waiting for his Credit Line? Probably not.

 

Maybe if more people actually thought about the other side of the fence, and how much money you are making them, you wouldn't be so surpised to see a CLD or an account closure.

 

So IMO, you hardly using your account was the MAIN reason. The rest of the excuses can just be made up to be able to put something in the letter for you.

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Be careful with your chart...I did the same basic thing and PEOPLE GOT IN MY FACE ABOUT IT

 

The problem is that its not really indicative of amex - all of the financials (and a lot of others) are as bad or worse. If they were going against the grain and failing when others were going up then it would be meaningful.

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So that would be about $15 made off of your transaction fees.

 

i think its a tiny higher, especially if its a bunch of small purchases totally $500. It works out to something over 3.5% for smaller transactions when you add the flat fee per transaction.

 

But... i did the math wrong in my head on my example - they probably make 50 cents off him per month.

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"BEST OF BREED" would never close a $1,000 account

 

Yeah, if the op runs it up (bet they CLD real quick if someone tried to use too much of the CL) and defaults, that $1000 will push them over the edge. :)

 

I don't think they like low spenders right now - it costs more to maintain than they earn back.

WHAT IS THE "REAL" COST OF AN OPEN ACCOUNT vs THE TOTAL LOSS OF 100% OF THE BUSINESS???

 

**CLOSED**

 

(be it $11.99 or $300 or $3,000 or $10,000 per month)

 

:rolleyes:

 

They make less than $2 on the $10 autopurchase. The cost of maintaining the infrastructure per acct is about that much - add in the cost of a support call (should he need it) and amex is underwater.

 

Someone recently said it cost approx $50 to process/approve a new application. No idea how accurate that is but when i worked as a CSR 15+ yrs ago the cost per call was $1/min to talk to a CSR and the goal was under 2:30 min per call.

 

I believe multiple transactions would be better for them, but a min of $50/mo is probably breakeven for most lenders.

On a very slow month I still spent over $1,000 with AMEX

 

More than 95% of purchases were on AMEX

 

The other 5% was on VISA or M/C

 

Don't tell me they didn't make money off me

 

AFTER THE MASSIVE CLD's THEY MADE $0.00

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Letter says because of my debt to income ratio and because I have "severe delinquencies" which really makes no sense whatsoever to me because I at least pay the min payment on things... So I guess I'll be pulling a report soon to see what the hell that's all about.

 

minimum payment is not a good thing, and they can see what is being paid to each creditor on a monthly basis.

 

The reason is also suggestive of derogatory information on the credit report, either paid or unpaid.

 

How much outstanding debt do you have that is reporting compared to your AXP reported income?

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Be careful with your chart...I did the same basic thing and PEOPLE GOT IN MY FACE ABOUT IT

 

The problem is that its not really indicative of amex - all of the financials (and a lot of others) are as bad or worse. If they were going against the grain and failing when others were going up then it would be meaningful.

 

Amex is a standout even amongst comparable financial stocks for its horrendously poor performance. Visa and Mastercard Int'l have each outperformed the S&P average, and lost around 35%-37% while Amex is down 85+%. Even Discover is 'only' down 64%.

 

And remember, we're talking 'Best of Breed' here right? I agree, you were going to lose money investing in financials over the last year, no matter which one you picked, but Amex has really outdone itself...

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Letter says because of my debt to income ratio and because I have "severe delinquencies" which really makes no sense whatsoever to me because I at least pay the min payment on things... So I guess I'll be pulling a report soon to see what the hell that's all about.

 

minimum payment is not a good thing, and they can see what is being paid to each creditor on a monthly basis.

 

The reason is also suggestive of derogatory information on the credit report, either paid or unpaid.

 

How much outstanding debt do you have that is reporting compared to your AXP reported income?

 

Exactly. Unfortunately, it is more than just your relationship with them. Most lenders are monitoring all of your accounts in today's environment.

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Letter says because of my debt to income ratio and because I have "severe delinquencies" which really makes no sense whatsoever to me because I at least pay the min payment on things... So I guess I'll be pulling a report soon to see what the hell that's all about.

 

minimum payment is not a good thing, and they can see what is being paid to each creditor on a monthly basis.

 

The reason is also suggestive of derogatory information on the credit report, either paid or unpaid.

 

How much outstanding debt do you have that is reporting compared to your AXP reported income?

I'm unclear on the part of the quote that I highlighted - a creditor can see fluctuations in balance, but I don't know how they can determine how much of the month-to-month balance change can be attributed to purchases, interest, or payments (minimum or otherwise).

 

Anyway, my guess is the "severe delinquencies" (if true) were the main cause of the cancellation.

 

All the micro-analyses of individual account profitability are great, but I doubt that each account is actually being reviewed like that. Customers are collected like fish in a net. The CCCs expect (hope) that, based on their projections, the profit from the "A" customers (big fish) will exceed the loss from the "B" customers by a certain amount. In the same way, they expect the merchant fees from the $100 and $500 purchases to offset the $10 purchases. If they really wanted to eliminate small purchases, they would set a higher minimum.

 

Unfortunately, attempts to reduce or eliminate "B" customer accounts (by CLD or closure) rely on poorly written risk algorithms that always seem to adversely affect some of the "A" customers as well ... :D

Edited by Revike
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Letter says because of my debt to income ratio and because I have "severe delinquencies" which really makes no sense whatsoever to me because I at least pay the min payment on things... So I guess I'll be pulling a report soon to see what the hell that's all about.

 

minimum payment is not a good thing, and they can see what is being paid to each creditor on a monthly basis.

 

The reason is also suggestive of derogatory information on the credit report, either paid or unpaid.

 

How much outstanding debt do you have that is reporting compared to your AXP reported income?

I'm unclear on the part of the quote that I highlighted - a creditor can see fluctuations in balance, but I don't know how they can determine how much of the month-to-month balance change can be attributed to purchases, interest, or payments (minimum or otherwise).

 

 

I know that both my EQ and EX reports viewable online have fields that reflect the previous month's payment (in addition to the minimum that was due). The online TU report only reflects the minimum payment that was due.

 

And, even if they get a shortened form, they will still see the totals and it isn't difficult to determine that if the balances are not changing significantly from month to month and yet there is a revolving balance, there are indicia that they may have a consumer who is treading water...

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1,000 Credit limit.

Never got an increase

Always paid in full each month..

No lates or anything.

Hardly used it.... I had an automatic $10 gym membership charged to it ever month which also got paid every month.

 

I did use it once recently for a $300 purchase. And again - I PAID THAT IN FULL. There is NEVER a balance on this card.

 

 

Letter says because of my debt to income ratio and because I have "severe delinquencies" which really makes no sense whatsoever to me because I at least pay the min payment on things... So I guess I'll be pulling a report soon to see what the hell that's all about.

 

The two bolded statements are red flags to any lenders. A bad DTI combined with minimum payments are definitely grounds for an account review.

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Letter says because of my debt to income ratio and because I have "severe delinquencies" which really makes no sense whatsoever to me because I at least pay the min payment on things... So I guess I'll be pulling a report soon to see what the hell that's all about.

 

minimum payment is not a good thing, and they can see what is being paid to each creditor on a monthly basis.

 

The reason is also suggestive of derogatory information on the credit report, either paid or unpaid.

 

How much outstanding debt do you have that is reporting compared to your AXP reported income?

I'm unclear on the part of the quote that I highlighted - a creditor can see fluctuations in balance, but I don't know how they can determine how much of the month-to-month balance change can be attributed to purchases, interest, or payments (minimum or otherwise).

 

Anyway, my guess is the "severe delinquencies" (if true) were the main cause of the cancellation.

 

All the micro-analyses of individual account profitability are great, but I doubt that each account is actually being reviewed like that. Customers are collected like fish in a net. The CCCs expect (hope) that, based on their projections, the profit from the "A" customers (big fish) will exceed the loss from the "B" customers by a certain amount. In the same way, they expect the merchant fees from the $100 and $500 purchases to offset the $10 purchases. If they really wanted to eliminate small purchases, they would set a higher minimum.

 

Unfortunately, attempts to reduce or eliminate "B" customer accounts (by CLD or closure) rely on poorly written risk algorithms that always seem to adversely affect some of the "A" customers as well ... :D

01/01 BALANCE $387.12

 

02/01 BALANCE $400.75

 

I only PAID MINIMUM and had interest

 

WRONG

 

I PAID IN FULL and spent another $400.75

 

or

 

I COULD HAVE SPENT $3,400.75 and PAID $3,000.00 BEFORE THE STATEMENT DATE (and CRA reporting)

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I'm going to pretend to be your friendly Amex FR team member. Let's take a look at what you posted here so far.

 

You hardly ever use our AMEX card....we make no money this way.

If you did use it, it was mostly for your $10 monthly gym membership..........we make very little money here.

You always PIF, never carry a balance.....again, we make no money this way.

 

So that would be about $15 made off of your transaction fees.

 

Now let me ask you this, if you had a client for an entire year, who made you $15 the entire year, would you go out of your way to keep that client as a customer? Would you keep them if you had 20 others in line waiting for his Credit Line? Probably not.

 

Maybe if more people actually thought about the other side of the fence, and how much money you are making them, you wouldn't be so surpised to see a CLD or an account closure.

 

So IMO, you hardly using your account was the MAIN reason. The rest of the excuses can just be made up to be able to put something in the letter for you.

 

Good analysis. Even if the OP is a responsible very credit-worthy customer, and I'm sure they are, he/she just isn't making Amex any money. If I spend only $500/year on a card, I worth about as much to Amex in revenues as I am to the soda machine at the airport I pump a $1 coin in once a month.

 

A while back someone posted an investors presentation that Amex made recently. Their investor relations folks came right-out and said that they don't really value low-limit cardholders, because they can't generate enough spend to meet their revenue targets. Having a high Spending-per-cardholder rate is critically important to Amex's whole business model (and they brag about it in their annual reports), because its the big reason they can get merchants to pay them a much higher fee than they pay Visa. Amex' scardholders spend more than Visa's or Mastercard's do, and the merchants want those kind of people. Having a lot of cardholders who charge $500 a year dilutes that.

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I'm going to pretend to be your friendly Amex FR team member. Let's take a look at what you posted here so far.

 

You hardly ever use our AMEX card....we make no money this way.

If you did use it, it was mostly for your $10 monthly gym membership..........we make very little money here.

You always PIF, never carry a balance.....again, we make no money this way.

 

So that would be about $15 made off of your transaction fees.

 

Now let me ask you this, if you had a client for an entire year, who made you $15 the entire year, would you go out of your way to keep that client as a customer? Would you keep them if you had 20 others in line waiting for his Credit Line? Probably not.

 

Maybe if more people actually thought about the other side of the fence, and how much money you are making them, you wouldn't be so surpised to see a CLD or an account closure.

 

So IMO, you hardly using your account was the MAIN reason. The rest of the excuses can just be made up to be able to put something in the letter for you.

 

Good analysis. Even if the OP is a responsible very credit-worthy customer, and I'm sure they are, he/she just isn't making Amex any money. If I spend only $500/year on a card, I worth about as much to Amex in revenues as I am to the soda machine at the airport I pump a $1 coin in once a month.

 

A while back someone posted an investors presentation that Amex made recently. Their investor relations folks came right-out and said that they don't really value low-limit cardholders, because they can't generate enough spend to meet their revenue targets. Having a high Spending-per-cardholder rate is critically important to Amex's whole business model (and they brag about it in their annual reports), because its the big reason they can get merchants to pay them a much higher fee than they pay Visa. Amex' scardholders spend more than Visa's or Mastercard's do, and the merchants want those kind of people. Having a lot of cardholders who charge $500 a year dilutes that.

As long as my amex CLs are minute, I will never be a big amex spender. Visa and MC and Disc will get my business bec there is not enough wiggle room on my low-rent amex cards to use them.

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