Watch Out - American Express Ripping Off Small Businesses

Like most of you I have a number of credit cards.  To my knowledge none of my credit cards exceed its available balance, and in fact I probably have $100,000 in available credit on my credit cards.  I have a substantial personal networth, and would be considered in the top bracket of income earners in this country. One of my credit cards is an American Express card.  I have had the card since 1994.  I have never been over the limit, and I have never had a late payment on that card.  The credit limit was $8,500.  Today I received an email from American Express telling me that my credit limit has been reduced from $8,500 to $500.  Obviously a credit card with a $500 limit is of no use to me, so today I cancelled my card with American Express.  Fortunely, it was a backup card and I don't actually use it very often.

I have one other American Express card.  In the past fourtern years I estimate I have put perhaps as much as $500,000 to $700,000, and maybe more, on these two cards.  While I may have missed a payment on occassion as I travel a lot, my balance has always been paid down, and any late payment has always been taken care of promptly.

I would like to think it is simply a sign of the times.  Credit is tight, and credit card companies are looking to lower their exposure and reduce risk.  I can well understand that.  But it seems companies like American Express, and others, have been taken over by computer systems and arbitrary rules that don't really pay much attention to the individual when making credit decisions.  Just as the mortgage companies gave way too much money to people without the income or ability to repay those mortgages, here I see American Express taking credit away from a long standing customer who has never given them legitimate reason to reduce a credit line so drastically.

This has significant implications for many small businesses.  Today many small businesses use their credit cards as an alternative to the bank line of credit.  In fact, many small businesses now use credit cards because it is easier to use a credit card with many suppliers, than to set up a separate business accounts.  First you don't have to go through multiple credit approval processes, and second, its easier to send one check to the credit card company, than twenty checks to twenty different suppliers for different expenditures.  But now the source of working capital for many small businesses may be at risk.  Imagine if you have a credit card that you put $10,000 a month on to run your small business, and suddenly American Express drops your credit line to $500?

I have nothing against American Express.  I presume they are making decisions in these difficult economic times to ensure they don't end up like Wachovia or Washington Mutual.  But I do know American Express spends a lot of money on advertising to court small businesses and I wonder how many small businesses took advantage of the American Express offers to help small business, only to find that American Express is now putting the credit squeeze on them?  I wonder if American Express might be better off spending more money to get to know their customers, rather than courting them one moment, and screwing them the next.  If you need a credit card, I don't see anything wrong with carrying an American Express card.  On the other hand, if you are using credit cards to provide cash flow for your business, based on my experience, I would highly reccommend to you DO NOT USE AMERICAN EXPRESS IF POSSIBLE AS IT APPEARS THEY COULD MAKE ARBITRARY CREDIT DECISIONS THAT COULD SERIOUSLY AFFECT YOUR BUSINESS.

Small businesses today need the credit facilities and the convenience that credit card companies provide.  I also have a business credit card from Capital One Visa.  I find the service at Capital One to be just as good as the service at American Express, and further Capital One has provided me with a $20,000 credit line, far more that I ever got from American Express.  I use that card to pay for expenses for a number of my businesses.  If you own a small business, you might consider contacting Capital One.

If you purchase a deal or the Secrets to Raising Capital from my website, I do give you the option of paying with your American Express card.  However, under the circumstances, I would prefer you don't use American Express.  I just don't think they deserve your business.