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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 |
