In my last post, I shared with you my unpleasant experience with American’s Express’s “Financial Review” process.    Here is the letter I will be sending to them:

My Letter To American Express

Tuesday, December 23, 2008

Dear Sir/Madame,

On December 3d, 2008, I received a call from Mr. Chris xxxxx with the financial review team.   The call was extremely difficult to hear, both due to the poor connection as well as the heavily accented language of Mr. xxxxx.  Frankly, it seemed more like a fraudulent attempt to obtain personal information than a legitimate communication from American Express. I was then startled to find out that my American Express accounts had been abruptly suspended.

I hold multiple American Express Cards, and was recently approved for additional cards that I will be using for business and travel expenses.   As I am sure your records will confirm, I have always paid my balances in full and on time.

The actions by American Express were outrageous on many levels:

1.  All of my credit cards were suspended without notice.  Had I been out of town or out of the country, this would have been a major inconvenience and possibly a crisis.

2.  Although I faxed the requested forms to American Express promptly, it took several weeks to restore my accounts.   My original fax on December 5th contained my wife’s social security number, but not her name.    Several days later, I was told of the error, and  that only I could correct it.  I re-faxed the form on the 9th.   It then took two weeks, and another call to Mr. xxxxx to follow up,  for my accounts to be restored.

3. Due to this issue, I was unable to achieve the $30,000 in annual spending necessary on my Starwood American Express card to be awarded Starwood Gold Status for 2009.   This is a very valuable elite status, and one of the very reasons that I have been an active user of my Starwood card.

4. Throughout this entire ordeal, I kept receiving marketing material encouraging me to activate and use my American Express cards.   It was as if American Express was mocking me.

I recently applied for and received cards for business and travel.  It was shortly after that, that my accounts were suspended.  If American Express did not want to extent me those cards, then they should have just denied them rather than approve them and suspend all of my accounts.    I have been a loyal card holder who has consistently kept my obligations to American Express.   I no longer feel that American Express can be trusted to uphold theirs.

Thank you for your attention to this matter,

Sincerely,

Jason D. Steele
Credit Blogger for AskMrCreditCard.com

2009 is going to be a great year! Some people are for New Year’s Resolutions, some people are against them. Whatever your stance on beginning-of-the-year resolutions, the credit card practices below will all see you through 2009 and beyond.

Resolution #1: Pay off your credit cards

Carrying a balance on your credit cards really is the wrong way to use credit - even though it’s very common. When you carry a balance and pay interest to the credit card companies, you lose most of the major benefits of having a credit card to begin with.

If you want to pay off your credit cards this year, make sure you try calling your credit card companies first. Customer service, or collection’s managers can remove fees and interest off of your card for you if you ask. It never hurts to have your balances reduced before you pay them off!

Resolution #2: Check Your Credit Report and Dispute Bad Information

It’s time consuming, and more than a little boring to sift through your credit files and check for inaccuracies. But! It is well worth it. Any negative information that you can remove from your credit reports will raise your credit score. In the long run, having a higher credit score will help you the next time you need to apply for credit - whether that’s another credit card, a home, or a vehicle.

When you are ready to take this step check out our step-by-step walk through. It makes the process of disputing items on your credit report easy.

Resolution #3: Check Your Credit Score

This step is not free, but it is essential. Once you have paid your credit card balances off, and challenged the bad information on your credit report, then it is time to check your credit score and see where you stand. Whether your score is high or low, you need to know where you stand because it will affect your actions in the future.

If your credit score is 700 or below just keep making your payments on time, and keep the balances on your credit cards low throughout the year. By the end of 2009, you will see your score skyrocket!

The easiest way to check your credit score is to go to MyFico.com

Resolution #4: Understand Your Credit Score

The more you know about how your credit score is computed, the easier it will be for you to raise your score and keep it high. There are many factors that impact your credit score. How much debt you have, how often you make your payments on time, which types of credit you use (home loan, car loan, credit cards, student loans), as well as how much money you charge on your credit cards each month and how old your credit accounts are. It can be a lot to take in, and even harder to understand how to raise your credit score.

For an explanation of exactly how your FICO score is computed, and how to predictably raise your credit score check out these articles:

Resolution #5: Take Advantage of Reward and Cash Back Credit Cards

If your credit score is 700 or above, and you do not already have cash back or reward credit cards, you can consider applying for them. As long as you do not carry a balance on your credit cards then you can take advantage of the many, many rewards programs out there.

Certain credit cards offer rewards for travelers (like air miles), may offer cash back on your purchases - which is like getting a very small perpetual discount on everything you buy. Yet other programs offer free gas credits, or money for college. Whatever your needs or favorite things are chances are there is a reward credit card out there that will benefit you. Remember though, that reward credit cards typically have a slightly higher interest rate than some other credit cards. So, if you carry a balance on them at all you are going to negate any rewards that you would have earned.

For more information on the types of reward credit cards out there, you can read our reviews of the different cards.

That pretty much wraps up the safe and suggested methods of managing credit. If you do these things your credit score will go up, and remain high. You will also be getting the full advantage of having and using credit through your reward cards.

How about you? Do you have any New Year’s Resolutions? Leave Us A Comment Below!

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One of our readers, Edward, had this question:

I currently have a bank VISA card with a zero balance and would like to cancel that card and switch to an airlines card. There is an annual fee on the potential new card but the benefits outweigh the fee. I have been told that when the old card is canceled, it could result in a lowered credit rating. Right now, our credit rating is excellent and I do not wish to jeopardize that rating.
Please advise

Thanks for your question Edward. You should definitely apply for the new card before you cancel the old one. Basically the length of time that you have had your credit cards amounts to 10% of your FICO score. Closing a card factors into that. So, yes, your credit score will take a hit when you close your old card.

If you are contentious about your credit, you pay your bills on time, and manage your credit well, it will not be a big hit - probably just a few points. However, the reason I recommend going ahead and opening up the new account before closing the old is simple: The credit industry is in a bit of a lending crunch right now.

It makes the most sense to have your credit score as high as possible before applying, that way you have the best chance of being approved for the new card that you want.

After you get the new card, you can choose to leave the old account open (especially since it has a zero balance) or you can choose to close it out and be done with it.

One last caveat: If you plan to carry a balance on your new credit card, then it would be best to leave the old card open with a zero balance.

I say this because how much of your overall credit limit you use has a large impact on your credit score: 30%. If you leave the old card open with a zero balance, this will keep your debt-to-credit ratio low, and it will actually raise your credit score.

If you do not plan to carry a balance, then there is no real harm in closing out the old account once you are done with it. The small drop in your credit score will most likely fix itself as you continue your good credit habits.

For more information on how your credit score works, and why certain things affect it, you can check out our article: The FICO Score Breakdown.

Hope this helps! Thank you very much for your question.