American Express Membership Rewards - Reducing balance mid-cycle?

Hi all,

I am attempting to purchase more than my SkyMiles card credit line will allow in the normal billing cycle. For example (numbers altered for simplicity and privacy)...

Please note that I have no other AmEx cards of any variety. I never carry an interest-charging balance.

With a total credit limit of $5k, I want to charge $8k during the cycle.

I charge ~$4500, then pay it down with a $4k electronic transfer in the middle of the cycle. Will I now be able to charge another $4k during the same cycle?

I have done this with a Midwest Express MC, without much trouble at all. In fact, I've even charged 6x the credit line in a billing cycle on the MC, but seem to be having some difficulty with the AmEx.

Any suggestions?

Thanks,
Tim in Hollywood

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by Tim in Hollywood:
I charge ~$4500, then pay it down with a $4k electronic transfer in the middle of the cycle. Will I now be able to charge another $4k during the same cycle?</font>

Unfortunately, no. Works great on MC but not AMEX. You can get another AMEX card and transfer the LOC from one card to another, but you may not get it by the time the double miles promo is over.

One thing you can do if you have enough time is enter a statement period with a credit balance. Then, you'll be able to charge the credit balance plus your credit line during the following cycle.

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by Steve M:
One thing you can do if you have enough time is enter a statement period with a credit balance. Then, you'll be able to charge the credit balance plus your credit line during the following cycle.</font>

Funny you should mention that. I called AMEX just to make sure something hasn't changed and asked: if I overpay before cycle #1 closes, can I use the credit balance + my usual LOC in cycle #2? She said no - you can only charge up to your LOC, credit balance or not. This seems to be consistent with other AMEX posters' experience.

Have you had any luck doing this?

I disagree. I don't know about a Skymiles card, but I have paid down my balance and spent more during a billing cycle than my total limit on my Amex on many occasions. AX is concerned about their risk factor. If you pay down the balance why wouldn't they allow more charges, their risk is the same and they make more transaction fees? I always call CS a couple of days after an electronic payment to verify the posting and to confirm an adjusted spending limit. Good luck.

My guess in the following, if your LOC is $5K that will be the max charge allowed.

If you overpay by $3K so that you have a $3K credit balance, two $4K charges may go through, but not a single $8K charge. Had this happen to me on a B of A Visa.

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by dahudgins:
I disagree. I don't know about a Skymiles card, but I have paid down my balance and spent more during a billing cycle than my total limit on my Amex on many occasions. AX is concerned about their risk factor. If you pay down the balance why wouldn't they allow more charges, their risk is the same and they make more transaction fees? I always call CS a couple of days after an electronic payment to verify the posting and to confirm an adjusted spending limit. Good luck.</font>

What kind of AMEX card are you using? After reading your post I called AMEX again - again, they said my LOC is the max I could charge regardless of the size of the credit balance (I have *wood and DL Skymiles cards).

I agree that it doesn't make sense, and it seems that they're losing revenue by being so restrictive. Most months I pay down the balance mid-cycle on Citibank's MC and it frees up my LOC in a day. I don't understand AMEX's logic...

I have a Centurion personal and Gold business. I have paid woen the balance on both in mid-cycle and charged more than the pre-set limit within a month to build more miles. Try paying it down and calling CS to confirm the payment and the "new" available credit for that particular month.

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by singlemalt:
Funny you should mention that. I called AMEX just to make sure something hasn't changed and asked: if I overpay before cycle #1 closes, can I use the credit balance + my usual LOC in cycle #2? She said no - you can only charge up to your LOC, credit balance or not. This seems to be consistent with other AMEX posters' experience.

Have you had any luck doing this? </font>

Here's what happened to me last month (numbers changed for obvious reasons): In the past, I've tried to charge more than my $5000 credit limit by paying down the balance mid-cycle. Like other people here, I've found that this doesn't work. However, last month, due to a mistake on my part, I entered the billing cycle with a $3000 credit. The automated telephone info line said that my available credit was $8000, which was the combination of my credit line and the beginning credit balance. As I made charges through the month, the "available credit" slowly went down, but stayed above my credit limit until I had actually consumed the credit balance. I didn't end up having to exceed my credit line in charges last month, so I can't say with absolute certainty that it would have allowed me to do so, but I have every reason to believe that this would be the case.

[This message has been edited by Steve M (edited 07-25-2002).]

Like I said, my guess is that the approval logic has two loops.

Does the charge exceed credit limit? If yes, reject, if not proceed to next step.

Does charge put the account over credit limit? If no, proceed, if yes a reject or noify someone routine.

When the system was set up, perhaps the idea of having a credit balance was never considered.

emailman,
have you actually tried this with amex optima cards.

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by eMailman:
Like I said, my guess is that the approval logic has two loops.

Does the charge exceed credit limit? If yes, reject, if not proceed to next step.

Does charge put the account over credit limit? If no, proceed, if yes a reject or noify someone routine.

When the system was set up, perhaps the idea of having a credit balance was never considered.</font>

I have had extended discussions with various departments of Amex about this issue. It seems that it is beyond their control and is in fact a limitation of the computer system at Centurion Bank (owned by Amex) which issues the various Optima cards. The previous contributors are also correct that the only way to exceed a monthly LOC limitation is to enter the billing cycle with a credit balance.

The above is not true with the conventional Amex cards but then the annual fees are higher plus they don't earn, Hilton, Starwood or Delta points just the less valuable Membership Reward points.

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by slow:
emailman,
have you actually tried this with amex optima cards.

</font>
No, I was making an assumption based on the information available and my experience in the IT industry.

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by clanson:
[B]The previous contributors are also correct that the only way to exceed a monthly LOC limitation is to enter the billing cycle with a credit balance.
</font>

Please confirm: Does that mean that if my credit limit is $5k, and I make sure I have a $3k credit balance when the new cycle opens, that I could put through a single charge of $8k? It is not clear from what people have said here if the system will accept or reject a charge larger than the limit, even if there's enough funds on the account.

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by lewinr:
Please confirm: Does that mean that if my credit limit is $5k, and I make sure I have a $3k credit balance when the new cycle opens, that I could put through a single charge of $8k? It is not clear from what people have said here if the system will accept or reject a charge larger than the limit, even if there's enough funds on the account.</font>

I recently entered a cycle with a credit balance. Using your numbers above instead of mine, the automated telephone balance line announced my available credit as $8k. I didn't try a charge larger than my LOC, so I can't say for sure that it would have been approved, but I assume that it would based on what the balance line told me.

I am not sure about this one either.

As emailman has mentioned above,
Visa allows you charge more than your credit limit in a month but not in a single transaction ie.
maximum per charge is 5000 but it can be done repeatedly.

What exactly does Amex do in this case.

Can he charge 8000 in one transaction or does he have to make 2 transactions for 5 and 3 (assuming entering statement with a credit balance works).

This question is for optima cards only (hilton, delta, starwood, etc).


<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by lewinr:
Please confirm: Does that mean that if my credit limit is $5k, and I make sure I have a $3k credit balance when the new cycle opens, that I could put through a single charge of $8k? It is not clear from what people have said here if the system will accept or reject a charge larger than the limit, even if there's enough funds on the account.</font>

[This message has been edited by slow (edited 09-09-2002).]

[This message has been edited by slow (edited 09-09-2002).]

Just the other day I was talking with someone who used to work for American Express. She gave me a little history lesson. She said American Express cards are not credit cards. They are charge cards. When Amex expanded to Europe they came out with charge cards that British royalty used because they were not allowed to carry cash. So anyways, American Express is not giving you credit, they are allowing you to charge purchases, up to a certain amount each month. So that is why you do not have a revolving line of credit and cannot "reset" your limit for the month by paying it off early.

"CLANSON"'s post is accurate in my experience.

With ALL OPTIMA co-branded products (Delta, starwood, etc), even I am assuming and including the non-co-branded OPTIMA card, you can only charge in a cycle UP TO YOUR LIMIT, PLUS WHATEVER THEY ALLOW AS An OVER-LIMIT AMOUNT, in one cycle. Pay ahead 400% of your limit mid-cycle to create a mega-credit if you wish...doesn't matter....you STILL get to charge only up to your credit line 1x, plus however much they will allow your account to flex ABOVE your cl, and, btw, this overflex amount changes literally daily, and is based on an undisclosed formula which looks at history, (I assume) FICO score, price of tea in china, etc.

In this regard, and because of this archaic policy, AMEX/OPTIMA loses in the mid- 5-figures worth of my business monthly. Citibank (Aadvantage) picks this up, because they allow mid-cycle payments to draw down your balance and reSTORE your credit line, as do many if not most V and M/C issuing banks. Don't know why AMEX is still stuck high-center on this interesting concept.

Contrast this to a "traditional" AMEX card, ie green, gold, plat, and cent...where you can, indeed, send in a chunk of money, which immediately is added to your credit line (which amex calls "exposure limit" I believe)...and you can really amass charges quickly if you so desire. Sometimes you don't even need to send funds in advance...just call them and ask for a 1x increase for some mega-size charge...and they will call your bank, confirm funds are present, and if your history is solid (and I assume other things "check out"), they will often approve same day or within a few hours.

To this end, if AMEX had merely added features to their Membership Rewards program as airline partners left, went out of business, etc, instead of letting MR decline and attrit and become diluted....I would have found ways to direct substantially more of my charging activity their way, but they have chosen a different course, ie to let MR continue to decline which has been hashed and re-hashed to the point of exhaustion...guess it was simply business decisions...so be it.

[This message has been edited by ILUVCITIBANK (edited 09-12-2002).]

Maybe AMEX/Optima has changed the rule...

I have an HHonors AMEX card and they have a current targeted promotion for 2x HH pts until October. Last month I overpaid $2000 on my account. And so far I have exceeded my original credit limit to almost use up my $2000 extra credit without any problem.

Do other people have similar successful stories?

If memory serves me right once a CSREP told me that Optima cards do not allow spending above your limit in a billing cycle.
other amex cards allow paying your balances in the middle of the billing cycle and use it.
My experince with having a credit balance has been different with my starwood optima.
When i had credit balance all my charges were being rejected.When i called customer service they told me that their system reads credit balances as over the limit. I had to have a person at cash register call them to manually approve it.

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by FlyByMike:
Just the other day I was talking with someone who used to work for American Express. She gave me a little history lesson. She said American Express cards are not credit cards. They are charge cards. When Amex expanded to Europe they came out with charge cards that British royalty used because they were not allowed to carry cash. So anyways, American Express is not giving you credit, they are allowing you to charge purchases, up to a certain amount each month. So that is why you do not have a revolving line of credit and cannot "reset" your limit for the month by paying it off early.</font>


AMEX offers both products. The Optima Card, among others, is a Credit Card (i.e. you are given a fixed line of credit). Whereas the Green, Gold, Platinum and Centurion are Charge Cards. It is easy to pay-down mid-cycle with a Charge Card. I'd suggest you apply for a credit increase on your Credit Card.


[This message has been edited by WhiteAMEX (edited 09-24-2002).]