American Express cards are at the top of most people’s lists for best and most exclusive cards. The company is also in a unique position in that it issues most of its cards itself instead of licensing its name and network to banks like Visa and MasterCard do. This means that there are a few quirks you should be aware of before applying for one of its cards.
Part of American Express’s prestige is that it is a very conservative lender, and its cards are difficult to obtain. To have a strong chance of approval, a FICO score greater than 700 and clean credit record are required. Its no-annual-fee revolving credit cards are generally considered easiest to be approved for and are a good starting point.
Revolving Credit Cards vs. Charge Cards
American Express is unique among card issuers in that in addition to its standard revolving credit card offerings that are just like Visa, MasterCard, or Discover credit cards, it offers several charge cards. Charge cards differ from revolving credit cards in two key ways. First, they have no official, preset spending limit (although American Express does have internal measures that will decline transactions after a certain point). Second, there is no option to carry a balance. Charge cards must be paid in full by the due date or the user faces heavy fees and account closure.
Charge cards are more of a legacy product that were simply kept on after revolving credit cards became popular, and many consumers don’t see a benefit of using them. However, some versions have rewards or special benefits that you may find worthwhile.
Carrying a Balance
Unlike other credit card lenders who rely on consumers carrying balances and being charged interest to make profits, American Express is known to frown on carrying a balance on any of its cards. Even customers who received zero percent balance transfer offers or were taking advantage of a zero percent introductory APR have reported reduced limits, account closings, or denial of additional credit with American Express because they weren’t paying their American Express cards in full each month.
Requesting a Credit Limit Increase
American Express has one of the most transparent policies with regards to credit limit increases. A credit limit increase can easily be requested online and uses a soft inquiry that does not affect your credit score. The maximum new limit is three times the previous limit, and most customers receive that amount for their first or second request if their account is in good standing and their credit score is still strong. If American Express is not comfortable granting the full request at that time, it will counter with the maximum limit it is willing to provide.
There are three key timelines to know:
-New cardholders cannot receive an increase until they’ve held the card for at least 60 days.
-A cardholder who is denied an increase must wait 90 days to submit a new request.
-A cardholder who receives an increase must wait 180 days to submit a request for an additional increase.
American Express takes income verification much more seriously than other lenders. Although it generally approves new credit card applications based on stated income, it closely monitors members’ spending habits and balances on all their cards to see if their habits are in line with their stated income. If the company feels that something is off, it will freeze the accounts and require the member to submit IRS Form 4506-T granting permission for American Express to request copies of the member’s tax returns from the IRS. If the stated income and tax returns aren’t reasonably close, the accounts will be closed or have their limits reduced. Financial reviews are also a normal practice when a customer requests a credit limit greater than $25,000.
Member Since Date
One reward for having an American Express card is once you are approved for your first card, that approval date will be your member since the date for any future cards. This means that if you open one American Express card today and one in five years when you open the second, both will immediately count as five-year-old cards for credit score purposes. This is because American Express is one of the oldest credit card issuers and grandfathering rules exempt it from the regulations that require all other issuers to report the actual opening date for each card opened by a consumer.