Credit card cancellations

Seven On Your Side
November 24, 2008 9:22:09 PM PST
The credit crunch is now affecting credit cards. And that means your card's interest rate can rise suddenly or your card can even drop you without warning. It's becoming survival of the fittest in this plastic jungle. "It's very frustrating. You have those they are supposed to never expire." David Reale's talking about his American Express rewards points, all 354,345 of them. David tells 7 On Your Side's Tappy Phillips, he was planning on using them to travel back to his honeymoon destination Hawaii. But, last month David got a shock from AMEX.

"Without any letter or notice (AMEX) took away the 3 hundred and sixty thousand something odd rewards simultaneously," said David.

David, a card holder since 1991 was suddenly canceled by American Express. Part of the reason? David said he had some delinquencies on his other cards and his credit score had slipped below 700. (credit scores range up to 830 to 850 points) And earlier this year David did bounce a payment to AMEX. But...

"That's the only thing they've ever noted as delinquent or over 30 days or anything," said David. He says he even re-paid the debt immediately. And hasn't been behind in payment before or since.

So, Does David have a chance to restore his reward points?

"He is out of luck," says Mandy Walker of Consumer Reports Magazine.

The reason? Most credit cards state their terms are "subject to change." They also state that interest rates can go higher at any time. And they have been now that credit is tight. But the good news? You may be able to negotiate it back down.

"You can, and if you've been a good customer or if they want to keep you for some reason, you're in the right demographic they may deal with you or they may not," says Mandy.

But what about David's reward points? We appealed to AMEX on David's behalf, but got nowhere. David's costly advice? "Cash them in while you have them. That's my little warning."

The expert says credit cards have to give you 2 weeks notice before raising interest rates. But this is the trend, interest rates are going up and some cards are even being canceled. That might make it a good time to re-evaluate your credit score for inconsistencies and try to keep all your bills current.

Story by: Tappy Phillips

Produced by: Steve Livingstone