CHESSNOID

I knew this company was having problems when they cut my credit line even though I was a perfect customer for them.  I have a high FICO score, have been a paying customer for 5-6 years and never made a late payment, and my cards have always been active.  Recession is forcing American Express to reduce credit lines for no reason.

Of course, things are much clearer now of why they did what they did. I actually heard rumors about this on the Internet and expected it to happen.  This is the first time I have seen an article on a big site talking about its now confirmed layoff of 7,000 employees. American Express to Cut 7,000 Jobs, Take $290 Million Charge, Freeze Hires.

Oct. 30 (Bloomberg) — American Express Co., the largest U.S. credit-card company by purchases, will slash 7,000 jobs, or about 10 percent of its staff, and may take a charge of as much as $290 million in the fourth quarter tied to the cuts.

American Express plans to save as much as $1.8 billion next year with a freeze on hiring and management raises, and less spending for technology and marketing, the New York-based company said today in a statement. The job cuts are concentrated on managers and other people who don’t deal directly with customers, the company said.

American Express lost about half its market value in the past year as rising U.S. unemployment forces consumers to spend less and default on loans more. The economy suffered its biggest decline since 2001 in the third quarter, with gross domestic product contracting at a 0.3 percent annual pace, the Commerce Department said today.

The cuts “will help us to manage through one of the most challenging economic environments we’ve seen in many decades,” said Chief Executive Officer Kenneth Chenault in the statement.

The company had said in July it was reviewing its operations, and Chenault said Oct. 21 during a conference call that cuts were likely. American Express said the same day that third-quarter profit from continuing operations declined 23 percent.

Cardholders failed to repay loans in the third quarter at almost twice the rate of a year earlier, and the company set aside $1.4 billion for loan losses.

And yet, because Amex mismanaged its resources they wound up hurting themselves more by alienating the part of their portfolio that pays on time every month and is never late. There are many comments in my blog posts of stories just like mine of what other customers went through.  Same theme throughout about being a loyal customer of many years, never late, no changes in FICO score (although that is a standard answer their CSRs will tell you if you inquire about why the credit limit decrease), etc.  I believe if the company was up front about their money issues or cash flow problems they were having, they could have kept the goodwill they lost with thousands of still good paying customers. With the annual fees Amex charges, they should have strived to maintain that goodwill for their long term business success.  When the recession is over and credit is back to normal, these customers will be lost forever.

I have read many comments now about people going to stores, restaurants, hotels thinking they had $25,000 available on their credit line only to find out their small purchase declined (Amex profiles where you shop to lower your credit line.)  Also, people doing balance transfers on open credit lines only to have those checks NSF on them.   I know based on what I read Amex is actually doing this at the point of transaction. It is not a coincidence that all the customers are getting hit the same day with the declines and all without notice.  The letter comes 7-10 business days later.

They are not doing it because something has changed recently on your credit.  The only changes on my credit was my credit score going down by 50 POINTS in 2 months when my AMEX credit limit utilization was instantly at 100% overnight. Thanks American Express for reducing my credit line without notice (and being disingenuous about the reason why… really blaming me when it was the company) and hurting my credit score in the process of trying to keep your company afloat.  I know my credit score will recover as I pay  down the balance and you continue to chase the balance (American Express playing “chasing the balance” game), but our business relationship is over.  American Express has broken my trust and literally thousands of others by being deceptive.