I had 2 accounts with American Express-one which I never even activated the card for. The other, I charged a rental car to a year ago in an emergency (that's what I have credit cards for-emergencies), and was expecting a low interest rate, and to pay it off soon. My interest rate went through the roof because my "debt to credit ratio" was too high-I was paying off all my cards, including Am. Ex. I was not in default for any of them. They were just too close to their limits.
Over the past year, I have paid 5000 dollars for a 1500 dollar charge to American Express. I have been trying to get my credit in shape, and the NUMBER ONE thing that I needed to do was pay off debts so that my credit/debt ratio would be wider.
I paid off American Express in Aug 2009; In September they contacted me by mail to let me know that BOTH of my accounts were closed. Their reasons were-debt/credit ratio, and delinquencies on other cards. I am not delinquent on ANY debt! I contacted the credit bureau, disputed items, and they were removed. I then contacted American Express, who explained to me that, although I had no delinquencies, my...again...debt to credit ratio was too high.
WELL OF COURSE IT IS IF EVERY TIME I PAY SOMETHING OFF THE ACCOUNT IS CANCELED.
I truly believe that they left the account open only because I was making large payments on it, and they new that if they closed it before it was paid off I'd pay minimums and no more-in fact, at this point, I might as well have gone into default for all the good paying it off did me. What else explains the timing of their closing the account? According to all three credit bureaus, they have checked my score and report bi-monthly as long as I have had the card. Why did they suddenly decide that what they saw was unacceptable-in a month during which my score had jumped nearly 100 points?
The only explanation is that, in an economy where many people are defaulting on debt, they kept it open as a "dangling carrot" to get me to pay it off, and then closed it as soon as they had their money. My credit report shows that it was closed at their request, and the jump that happened in my score before has been lost and then some.
My credit score is meant to reflect how likely I am to pay off debts-but it would be better if I hadn't paid it off! I understand that credit is abusiness, not a public service-but it my tax money is going to "bail out" these jokers, then there should at least be some oversight into how badly they are allowed to screw me.
I paid off two other cards, and the same thing happened. I paid a third one down, and they lowered my limit to just above what I paid down to. Watch out-they're worse than ever.