American Express Membership Rewards - Trouble Triggers

For the last months, this board has been awash in horror stories detailing AMEX’s mad rush to reduce its risk by canceling accounts, reducing credit limits, undertaking onerous financial reviews, and generally messing with folks who were considered good customers before the economy turned south—and before prudence began to overshadow greed in their corporate calculus.

No one can be sure of the exact set of circumstances that will set off the AMEX “tilt” buzzer for any particular customer. In fact, it’s entirely possible that the formula is a movable target, inconsistent at best, cynical at worst. Nevertheless, in reading all the posts on all the related strings for months, some trends seem to emerge that I think may be worth mentioning.

Please understand that these points are subjective on my part, based on my impressions over time. I have not gone back and counted posts, or done any other statistical gymnastics. Which is why I’d be interested in any additions, or objections you may have (civilized, I hope).

Herewith, then, my list of “Trouble Triggers”—things that might put you and your account(s) in the AMEX crosshairs.

• Lots of accounts. If you believe the TV commercials, the typical American family has 8 credit cards. If you believe a good many of the posts on this board, the typical FlyerTalker has that many and maybe more, often split between personal and business, and often including three or more AMEX accounts. I think it’s possible that AMEX looks at a fistful of cards as a negative. They probably wouldn’t say so in public; they certainly wouldn’t have said so 15 months ago. Depending on whose post you read, they may actually be limiting the number of AMEX accounts you’re allowed to have. Whether or not that’s true, I think the sands have shifted and they may well feel that less is more.

• Game playing. Naturally, most people who get credit cards—and especially those who post here—want something in return. Perks are a big deal. And while in the brave new world of credit the goodies are still available, it’s possible that you’re marked down if you’re perceived as juggling funds, having bunches of low-limit accounts, or otherwise playing games in order to spin the perk wheel beyond what they think is reasonable. This is very soft and subjective of course, but I have a hunch that this issue figures into the algorithm somehow.

• FICO score. Post after post talks about scores of 700+. Some say 750 or so. I’m hearing that 760 is the new “gold standard,” up considerably from what it used to be. But I have a hunch that 800+ these days would go a long way toward keeping AMEX off your back. I’m getting the feeling that 700 is marginal for the kinds of credit lines and service that most people here want and feel entitled to.

• “I pay my bill every month.” So many people say this, and I’m sure it’s true. But the devil may be in what they often don’t say. . .Do you pay 100% every month, or just the minimum, or something in between? Have you ever failed to do so? Do you pay all your other bills (credit card, mortgage, etc.) in full every month, without fail, world without end? If not, it may help explain why you’re being targeted for infamous treatment.

• Percent of available credit in use. Personally, I shake my head when I read posts from people who get yet another card with, say, a $2,000 limit, then send in payments every week or two so they don’t bust the limit while racking up points or miles or other perks. Lots of questions arise, and we can only guess at some of the answers. But what seems clear is that such a scenario will probably never help one’s credit score, since the percentage of credit in use will remain very, very high on this card at least, and probably on the user’s overall line as well.

I once said in another post that I believe in keeping it simple. My wife and I share two credit cards, an AMEX Surpass and a MasterCard. Each has a $25,000 credit limit, which is many multiples above our average monthly spend. We pay those and all other bills in full every single month. The interest rates are irrelevant because we never pay them. No credit card company has ever questioned us, blindsided us, or fiddled with us in any way. That said, I’m not a Pollyanna—I realize that we could be next and it could happen at any time.

In response, some pointed out to me that FT’ers tend to make a hobby of gaming these systems, pushing the limits, figuring out how to win the chase for the perks in new and creative ways. One person compared it to stamp and coin collecting. Well, that’s fine with me. But I do wonder at what point AMEX and other credit grantors now consider people who do this to be too smart by half. . .and treat them accordingly

three or more AMEX accounts. I think it’s possible that AMEX looks at a fistful of cards as a negative. They probably wouldn’t say so in public; they certainly wouldn’t have said so 15 months ago. Depending on whose post you read, they may actually be limiting the number of AMEX accounts you’re allowed to have. Whether or not that’s true, I think the sands have shifted and they may well feel that less is more.

I noticed this copy on the UK American Express home page today...

Different Cards for different spending. And more rewards.

... follow by a link to apply for another card.

Allga,

First, thanks for the essay/post. You have provided some good thoughts.

Regarding, "Lots of accounts", AX is bombarding us with offers and we are responding.

1. FT is filled with AX offers for multiple cards. If AX does not like FT'ers, why are they advertising on FT?

2. My AX account - Every time I log on to my online account, AX is offering me:
- A platinum card
- Additional cards
- Invites for me to send to others to apply

3. DL/NW merger resulted in tons of AX solicitations to get cards.
- Former US Banks Worldperks Visa holders were solicited.
- Former (actually still current) NW Worldperks members were flooded with offers for at least two cards with up 40,000 miles each
- AX DL SM card offers for 25,000 miles are rampart

4. AX Gold card offers for 10-15K points each are all over the internet.

If AX does not like credit card churning, it is news to me. AX is trying to open all the new accounts it can find.

Personally, I just think AX has become a fairly poorly managed company. But, I will continue to "fall" for their offers and continue my quest for miles and points. To date, AX has given my over 400,000 points/miles for nothing (all bonuses on no first year fee cards). AX is a lousy company, but I can deal with them.

My impression is that the most significant indicator that puts you in the category of likely to get reviewed is if you have an Amex credit card, as opposed to what they call a charge card (one where you are expected to pay the bill in full each month).

I got the nasty phone call from AMEX because they said I had too many accounts with them, I think I had 4 at that time. 2 charge and 2 credit, I closed the credit ones. Seems silly that they would make a fuss about this whilst sending me pre-approved apps for different cards all the time, almost all of which hit the shredder.

My oldest account with them at the time of the call was 9 months and shortest was within the month.

I PIF on all cards, not just AX and rarely go over 30% utilization, though I do put most of my charges on AX cards....

As for FICO, I've read that they're not accepting anyone under 750, last I checked my 3 bureau average is ~745 but I have no plans on applying for anything in the near future so I won't be checking that out.

Allga,

First, thanks for the essay/post. You have provided some good thoughts.

Regarding, "Lots of accounts", AX is bombarding us with offers and we are responding.

If AX does not like credit card churning, it is news to me. AX is trying to open all the new accounts it can find.

Personally, I just think AX has become a fairly poorly managed company. But, I will continue to "fall" for their offers and continue my quest for miles and points. To date, AX has given my over 400,000 points/miles for nothing (all bonuses on no first year fee cards). AX is a lousy company, but I can deal with them.

Good thoughts. I was going to mention this, but my OP was getting long.

Basically I think you hit on the key point when you said that they're a fairly poorly managed company. It's not hard to imagine that the marketing people in AMEX are in more or less continuous tension with the risk management people. You see this sort of thing in any big company, even in good times. The job of management is to keep the tension healthy, and to be sure that the company speaks with one voice. To all appearances, AMEX has done neither.

When you have parts of the company working at cross purposes, you see the kinds of things that have been talked about here. In other words, there is no necessary correlation between offering you more and more cards, and having your accepting them make you a happier customer who gets great service with no hassle.

So it's very likely that we're both right. The marketing department will be happy to give you cards, but the risk people might still ding you for having them. And, parenthetically, so might FICO.

Hi, allga,

Yes, your OP might have been getting long, but props to you for formatting it well. Bold, bullets, short paragraphs -- who would have thought a little FORMATTING and white space on the page would increase readability?! Way to go!^

(I wish everyone would follow your lead.)

Spot on, regarding "gold standard" FICO scores. My low and middle score are 763 and 767, which always snared "excellent" ratings, but which now rate only "good." My top score is 802. And I'm pretty sure I can account for the difference: the bureau scoring me 802 shows only 1 application for credit over the last 12 months; the other two bureaus report three credit apps over the same 12 months. In all other respects, my credit reports net out nearly identical.

And therein lies the rub for the game-players, the debt-shifters, the balance-transfer spin-o-rama. Yes, you might get new cards now and then, and a smattering of bonus points, but at what cost to your FICO scores?

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Thanks for starting this thread. Will be interesting to see where it leads.
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My low and middle score are 763 and 767, which always snared "excellent" ratings, but which now rate only "good." My top score is 802. And I'm pretty sure I can account for the difference: the bureau scoring me 802 shows only 1 application for credit over the last 12 months; the other two bureaus report three credit apps over the same 12 months.

And therein lies the rub for the game-players, the debt-shifters, the balance-transfer spin-o-rama. Yes, you might get new cards now and then, and a smattering of bonus points, but at what cost to your FICO scores?

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Noneemac,

Your post is interesting.

You have applied for 3 credit items in the last 12 months and your credit scores are 763-802.

" but at what cost to your FICO scores" - Based upon your post, you are not very familiar with credit scores and the impact of credit applications. My example, in the last 12 months, I made 19 hard pulls, and my credit scores are approximately 20 points below yours". What cost? None, the only thing I got in the last 3 years from churning credit cards is 1.8 million frequent flyer miles. If you do not mind, I will take a 20 point "hit" on my credit score and keep the 1.8 million miles.

One more item, read the posts, most FT'ers are NOT applying for credit for balance transfers, credit shifting, etc. They want miles for free!

I know 5 people who were FRed and they asked for the reasons and got them. here is the list (as heard from Amex):

1. 2 times were payments returned when paying within 12 month

2. Autorized users are spending more then primary - creating liabily that primary might not want to take care off

3. Many charge backs on the account

4. Charging expensive items and then returning them.

5. Too many accounts with high credit lines (lines not used even worth - now they have what to loose)

6. Charges are much higher then regular monthly spending ($5k preaproved charges on charge card over $1k reg. monthly spent)

7. State of economy (yes:D)

8. Person owes a lot to Amex AND can borrow even more.

9. In most cases credit line was slashed by Amex couple month before FR.

What was NEVER mentioned:

1. FICO score
2. Area where person lives
3. Where person shops
4. Business card or personal
5. Charge cards or credit cards
6. How many years customer

Noneemac,

Your post is interesting.

You have applied for 3 credit items in the last 12 months and your credit scores are 763-802.

" but at what cost to your FICO scores" - Based upon your post, you are not very familiar with credit scores and the impact of credit applications. My example, in the last 12 months, I made 19 hard pulls, and my credit scores are approximately 20 points below yours". What cost? None, the only thing I got in the last 3 years from churning credit cards is 1.8 million frequent flyer miles. If you do not mind, I will take a 20 point "hit" on my credit score and keep the 1.8 million miles.

One more item, read the posts, most FT'ers are NOT applying for credit for balance transfers, credit shifting, etc. They want miles for free!


Let me clarify: I didn't actually *apply* for credit three times in 12 months. One of the three "hard pulls" was for a new card, one was for an credit limit increase, and one was a dubious pull by Allied Interstate. (And the less said on this board about those scum, the better.)

After reading your boast about 19 hard pulls, I called MyFICO and IdentityGuard, and I spoke to reps who concurred that each pull on average lowers a FICO score about two to five points. And that anybody who was "recklessly" doing that much applying would certainly send up a red flag.

If you already have great credit, of course, then a pull or two amounts to a minor speed bump.

I'll agree with you that sacrificing 20 FICO points for a hefty bonus and the chance to earn good miles/points is worthwhile, unless you are needing that score right away for something more important, like a good home loan.

But you'd have to do some serious convincing to get me to believe that you accrued 1.8 million bonus miles in the last three years just by scoring several credit cards. Would you care to share the details of your bounty? How many new accounts were you actually granted, of those supposed 19 pulls?


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In regards to your last paragraph: I have read MANY posts (as I pointed out in my OP in the Hilton HHonors Surpass thread, I read the whole thread), and well ... there's no such thing as "for free." All credit apps come at a price.

The IdentityGuard rep frankly thought you were "blowing smoke, as anybody can do on the Web, where they can be anonymous."

I would concur. Your claims sound specious. Would you care to disabuse me?

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...have to do some serious convincing to get me to believe that you accrued 1.8 million bonus miles in the last three years just by scoring several credit cards.

1.8 million miles in 36 months (50,000 miles per month) is plausible. If you read (for example) this thread...

http://www.flyertalk.com/forum/other-credit-card-programs/778645-citicards-60-day-one-application-policy-90.html

...you will see that Citi will accept repeated applications for the same AAdvantage cards and will award bonus miles each time for only minimal spending. Search using the keyword: churn

Thank you, mia, for mentioning the Citi thread. Over the two previous days, I read that entire thread (and I've since posted there).

I have learned a lot about churning in the last two days, and so while I now understand (and embrace!:cool:) the concept (for responsible users of credit, of course), I'm still trying to do that math.

Two cards @25K miles each = 50K miles, six times a year at most = 300K miles per year X three years = 900K miles. (Make it 1.2 million miles if he was able to squeeze in all 12 potential business cards during that span.)

So I count 1.2MM miles for someone successfully applying *exactly* every 60 days and every 90 days (assuming the Citi calendar allowed such efficiency) for three years. Throw in 50K extra for, say, 10 cards that earned 30K bonus miles, and you still come up short of 1.8MM.

What am I missing?:confused:



1.8 million miles in 36 months (50,000 miles per month) is plausible. If you read (for example) this thread...

http://www.flyertalk.com/forum/other-credit-card-programs/778645-citicards-60-day-one-application-policy-90.html

...you will see that Citi will accept repeated applications for the same AAdvantage cards and will award bonus miles each time for only minimal spending. Search using the keyword: churn

What am I missing?A spouse?

A spouse?

Perhaps. I thought he was talking about his own accrual, but maybe the spouse is the magic multiplier.

• Percent of available credit in use. Personally, I shake my head when I read posts from people who get yet another card with, say, a $2,000 limit, then send in payments every week or two so they don’t bust the limit while racking up points or miles or other perks. Lots of questions arise, and we can only guess at some of the answers. But what seems clear is that such a scenario will probably never help one’s credit score, since the percentage of credit in use will remain very, very high on this card at least, and probably on the user’s overall line as well.

I have a question regarding this point. I have moved to another country and since I am a newbie there without a credit history my bank gave me a Credit Card with a very low limit ($1,000). Back home I had 3 credit cards (VISA, MA, AMEX) with lowest limit of them having $5000 (the highest is $10,000). Ofcourse I did not use such limit every month but it came in handy whenever I went for a vacation. I never had trouble paying my bills whether regular bills or credit cards as they automatically get paid in full every month.
Anyway, here I have a limit of 1,000 which is lower than my monthly spending. What I am doing is to put money in the card so I can make it usable. The way you have mentioned it I am doing harm to my credit score. How can I improve my credit score fast yet have the ability to use the card in every day purchases?

I have applied for a global card transfer and I am waiting if it goes through or not, and if they do transfer my limit (or close to it) then I will be fine :)