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Issues With American Express And Bank Of America

by Mr Credit Card

Several readers have written in with questions they had about their American Express and Bank of America Accounts.

Dr. Brenner sent in the first question:

American Express canceled our card. We had no balance from the month before and a few hundred dollars in charges on a $37,000 limit card. We have one other card and there also do not carry over a balance.

I know that Amex can canel at will, but they did so without notification. When we called to inquire, they said they had notified us by mail, but they mailed us one day before they canceled. Naturally it reached us several days after the event.

Also they said they tried to phone us, but there is no record of any phone call from them. I found out they had canceled when I tried to gas on the road. It was fortunate I had another card with me. Can they cancel without notification?

Dr. Brenner,

Unfortunately, the short answer is yes, they probably can. It’s happening all over – to people with excellent credit histories, who make all of their payments on time. There is nothing you could have done to stop it. It’s happening because the banks have overextended themselves and they are cutting back.

As far as giving you notice, and whether or not that is legal, you will have to check the terms and conditions for your specific credit card. Most likely there is a clause that says they can cancel without notice, or with very little notice. There will probably also be a clause that says they can change the terms and conditions themselves with very little notice. Each card’s terms and conditions can be slightly different, so check the most recent copy of the terms and conditions that you have.

We had another reader, Connie, who wondered what what would happen to her credit score when American Express reduced her credit limit:

I am a AMEX Green Card holder for the past 14 years and have never failed to pay the balance each month. About 16 months ago, I also became an AMEX Blue card holder with a $10,000.00 limit. I did not use this card until this past December and have a balance of about $1000.00.

While I have not paid the balance off each month, the few payments I have had to make have been on time and more than the minimum. I do plan to pay if off over the next couple of months. However, I just received a letter from AMEX advising me that my $10,000.00 limit has been reduced to $1400.00.

My question is this– Since lowering the limit makes it appear that I have almost maxed the card out–how does this affect my credit score (my most recent score was 738),wouldn’t this have a negative affect on my credit?

Connie,

It will have a negative affect on your credit if American Express bothered to report your limits to the credit bureaus to begin with. In some cases, American Express does not report “Preset Limits” to the three credit bureaus, and just reports the amount that you charged on your card that month.

The credit bureaus then use the amount you charged as your reported limit since American Express did not specify the limit on the credit card. When this happens, it actually makes it look like you are maxing out your cards every month. If that is what’s going on, then no, it will not hurt your credit any more than it has previously.

However, if American express does report the limit on your particular credit card, then yes, this limit decrease will hurt your credit score and it should be paid down as quickly as possible to avoid dropping your credit score.

The only way to tell whether American Express is reporting a limit on your particular credit card is to check your credit reports.

Last we had a reader, David, ask this question about his Bank of America Credit Account:

My attorney has filed my petition for bankruptcy and my hearing is scheduled for May 14, 2009. When looking on line at my credit card accounts, I notice that they have almost all disappeared except for one. Suddenly, Bank of America has come up with a whole new account number and is claiming an amount due of approximately $5,000. I claimed the two accounts I had with them in my petition for bankruptcy and this new account number is NOT one of the two I claimed. They have gone ahead and MADE UP an entirely NEW account number. It appears that I am now responsible for paying that new account. Is that possible? Please advise.

David,

Well, anything is possible, but that seems extremely shady to me. I would give Bank of America a call and ask them what happened. If they have done the gypsy switch with your accounts, make sure that your attorney includes the new account in your bankruptcy proceedings.

A word of caution though, if you have no knowledge of the account at all, then it could be a case of identity theft. If Bank of America doesn’t know what happened, and you don’t know what happened, then it really could be that someone used your information to open up a new account. If that is the case, you can still include the account in the bankruptcy, but it would be better to treat it as identity theft and take extra precautions (like monitoring your credit reports, or placing a fraud alert on your credit reports.)

Thanks for your questions!

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4 Responses to “Issues With American Express And Bank Of America”

  1. kathryn Says:

    Hi, I have been a Bank of America credit card holder for almost ten years. My card is a MasterCard with a credit limit of $21,500. I have a zero balance on this card and have not used it for over a year. However, the card does not expire until 2011. I just received a new Bank of America credit card in the mail which is an American Express card. The credit limit is the same as my old card as is the expiration date. The paperwork that came with the card lists the last four digits of my MasterCard as my “old account”. I have not activated the new account and find it very odd that Bank of America would be switching card types entirely without notice. I am wondering if this is a scam to raise my APR? I called Bank of America to inquire and was informed that they were automating their system, and could not access my account for at least four hours. I will of course call the company back, but I am wondering if others have had this same experience and if you suspect there are alternate motives for sending me this card? Thank you.

  2. Dave Says:

    Kathryn:
    My situtation is exactly the same as yours. I am also wondering what’s up. Any further info from others would be greatly appreciated. I found your comment this morning while “googling” for answers to this issue.

  3. gina Says:

    How do i obtain an amerian express card or why don’t they offer second chance offers?

  4. cms00rit00 Says:

    Though some cardholders may rack up debt, most honor their debts, making the payments by the due dates and have every intention of paying off the balances. Everyone’s scenario is different, but most cardholders are responsible. Credit card issuers such as American Express continues to take advantage of long-time, loyal members by raising interest rates, lowering credit limits, etc. without due cause, contrary to what Executive Vice President and General Manager of Consumer Card Division of American Express, Larry Sharnak stated.
    Please, if you are an American Express cardmember, we know you have been affected!
    Read this petition and sign it to protest!

    http://www.ipetitions.com/peti…..index.html

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