danville 1K

My wife has honed the ability to spend more than I make to a fine science... but she does it in stores and on tangible goods. Were she to be doing it on an MS basis with gift cards there is no doubt in my mind AMEX would be looking askance at us. In our case it probably helps that I've been a card member since 1973.

maddie5218

But what if it's an occasion of parents just paying for everything the person buys. Would they consider a parent's income in this? In real life it's technically MS, but my parents make about 10x what I make in a year, and they could be supporting me. Does that make sense? I'm trying to ask my questions properly and not sure if it's coming across correctly.

Even if it's something like you pay for your entire rent, and your roommates just pay you in cash. Or you pay out expenses for travel for your company and just submit an expense report. It just seems wild to me that they're so finicky with people "spending over their means." Isn't that the purpose of the high interest rates? I just don't understand why they seem to so easily be willing to completely cut somebody off, especially if they have no history of not paying on time or in full.

danville 1K

Sure they would... if the primary card holders are your parents and your card is an additional card on their account. Otherwise AMEX would have no way of connecting the dots.

maddie5218

Yeah that's my point though. It could be my card, but my parents could give me $X a month to live on which I could spend at my leisure. Yet AMEX will freak if I spend more than my yearly income.

mia

They could also stop giving you that money at any time. American Express wants assurance that the cardholder could pay the bill within terms even if your employer, roommate or parents did not provide the funds.

CFFrost

I don't think they necessarily freak out if you spend more than your yearly income. I spend more than my income on my card and have never been FR'd. I think the threshold for FR is actually higher than that, provided you have good credit, good payment history, etc. You cannot, however, randomly increase your spending 10 fold unprompted. Read through the anecdotes here and you will see that many FR reports involve uncharacteristic and sudden increases in spending, frequently on newly issued cards. This may be because the person is using MS to get more points or meet spend on the new card, or (for example) because an employer changed policy and now allows employees to charge reimbursables to personal cards. Generally, increase your spending slowly and over time and ALWAYS pay your bill promptly and in full and your chances of a FR will remain very low. Also, guard your credit. Amex (and other issuers) routinely monitor credit reports with soft inquiries - so if you have negative changes to your credit report that could be a factor, too.

United747

I can attest to this as well. I put a lot of client reimbursed expenses on my amex card. I'm not even a year into my card membership and I have spent probably three times my income. I have paid every bill on time and sometimes several times a billing cycle. No fr here. (As I go knock on wood)

FTR 787

Hmm hold on a second, I don't understand this point or rather the logic here. What are you supposed to do for new cards that you're instantly approved for which have high spend, high reward bonus offers? There are some lucrative offers such as the $10k for 100k MR in 3 months that literally require you to spend more than $110 day after day, every day at a minimum of 90 days in order to meet the min spend.

It'd seem ludicrous to entice new customers to sign up for your products with such offers that are *designed* in a certain way that may actually cause new customers unnecessary trouble & hassles. This probably points to a flawed algorithm that needs to be fixed on AmEx's end to keep up with their current offerings -- lest it be some sort of bait and switch tactic -- get customers to sign up, use your product and earn whatever bonus you were peddling only to close their account? Seems like a recipe for a lawsuit.

And to mia's point above so they wanna make sure you have enough income to cover their risks -- but they aren't checking future income (which can change as you noted your employer may not always be there.) they are also checking past income via a tax return which for most intents and purposes is money that's gone and no longer there. Lastly, what they should really check when determining a borrowers ability to payback are savings -- but once again it's not guaranteed as the person could spend that elsewhere. So not really sure what goal an FR achieves in the first place. From a customer perspective with great credit history, it seems like bad business practice & horrible, troublesome customer service on AmEx's end and possibly something worse (collection of unnecessary data, harassment, bait & switch, setting upto fail etc.) why are you the customer declared guilty until proven innocent instead of the other way around? I don't get it.

mia

We are supposed to purchase goods and services that we need. These offers are designed to attract individuals and businesses which spend at that level. They are not designed for people who need to stretch or manufacture spending to obtain a bonus. American Express explicitly tells us that certain types of spending are prohibited. If we disregard that warning and use the card to buy instruments which can be readily converted into cash, we should not be surprised that American Express requests evidence of our ability to pay.

Card issuers know more about us than we tell them directly. I have had only one bank request proof of assets, but American Express does ask about assets on their current application forms and they can corroborate the answers from other sources.

FTR 787

funny thing is that, if you do spend a lot of money (frivolously or otherwise) on actual goods and services, isnt that a higher risk? I'd say getting VRs you're literally in a better position to pay off your debt since you have that money (almost) handy, rather than waiting for the next paycheck etc.

and to Steve M's point about Amex being on the lookout to prevent them holding the bag for a bust-out, well how is that not the same for products or services? amex should have the same concerns for repayment because once again the person could charge up all the fancy goods and services they want and also leave amex hanging -- I dont see much of a difference here.

I've never had a direct amex card, but reading stories in this thread and similar ones makes me leery of ever applying for one even with targeted offers. afaik, amex has some overtly lopsided policies. and I really like amex for their consumer protections and good customer services, atleast on their citi amex cards, among other products. so its very confusing why main amex would seem to leave such a bad taste from a customer experience viewpoint.

CFFrost

To the contrary, buying cash equivalents is considered extremely high risk. It could very well signal that the card holder is in need of cash, and finding creative ways to avoid cash advance fees.

Keep in mind that some people that buy these products are buying them for reasons other than the points.

mia

Why, specifically? What is it that happens during a Financial Review that you would find unpleasant?

There is a misunderstanding. Those cards are issued and administered by Citi. American Express is not involved. They simply operate the transaction network in the same fashion as MasterCard or VISA.

For reference here are threads about the parallel processes by Citibank and Chase:

http://www.flyertalk.com/forum/credi...disclosed.html

http://www.flyertalk.com/forum/chase...ints-help.html

http://www.flyertalk.com/forum/chase...0-000-urs.html

http://www.flyertalk.com/forum/chase...ur-points.html

A noteworthy difference is that Citi and Chase tend to confiscate points balances, while American Express does not.

FTR 787

true but really anything could be "cash equivalent" ... someone could buy a laptop for resale, hell even a fancy bottle of champagne. not as easy you might say but does that matter? I think the key distinction amex should make is not a borrowers *ability* to payback so much as the borrowers *intention* of paying back.

someone smart enough to find creative ways to avoid CA fees is smart enough to buy and sell goods to get at that same level of liquidity. in either case there's no indication of the card holders intention to payback amex. so purchase history shouldn't be an indication of future payments or resources or anything else. you know what should be though? actual, payment history which the credit report provides.

once again, I just dont see what purpose an FR actually achieves. but hey, what do I know.

FTR 787

just the hassle of jumping thru hoops. besides who wants to be made out to be guilty and have to prove themselves innocent?

and before that happens, always seemingly having to be on the lookout and watching your back for if and when that dreaded FR hammer falls on you. doesnt seem to be a very pleasant experience. am I being too dramatic? lol

ah I see, so the CS I deal with is not really amex at all eh, just a diff dept over at citi (diff phone number and location on their envelopes from other citi cards.)

and good point about chase and citi -- however in those examples, the people were clearly abusing the programs to their extremes and it was obviously a losing situation for the issuing banks to do any more business with em. any business in that case would sever relationships if the customers cost them more to have then the business they are worth in return.

my point with these posts is that amex seems to be too black or white from the get go. and I dont think its the right way to go about it. sure if someone is churning their CL multiple times in a month, I can understand them looking closely at that person but flagging someone and hassling them over $2500 with a $10k CL like one poster above or someone who made a full payment before their statement closed etc, lol c'mon - that's ridiculous.

mia

Intentions can be misrepresented. A card issuer wants to assess both our intention to repay and our ability to perform. One or the other isn't sufficient, a lender needs evidence of both. Credit history addresses intention, a Financial Review addresses resources.

A card issuer also needs to make a profit. If a bank offers ~$1,000 bonus for a new account tied to spending $10,000 in a specified period, it is because they are looking for customers who are likely to spend at that level ongoing. If they see that you are recycling money by purchasing cash equivalents, they think that your purchase volume is likely to decline after you meet the objective. You probably aren't the customer they were looking for. These are generalizations. There are exceptions. You might be one of them, but they won't care. If you cannot document your ability to pay, to their satisfaction, they will close your accounts.