While using credit card rewards for amazing travel deals is legal, some behaviors may seem questionable.
While card issuers have put in place rules to limit credit card usage and attract long-term value customers instead (think: Chase’s 5/24 Rule), many disputes between award travelers and major banks stem from questionable credit card usage.
Each card issuer handles this differently. For example, take American Express. If your credit card activity triggers a fraud alert, American Express may place your account under “financial review,” which could be disruptive.
Let’s explore the Amex fee review process to better understand what it entails and how to avoid it altogether.
This post is based on the personal experiences of several travel rewards experts who have all gone through Amex financial reviews. Considering the sensitive nature of this article, they asked not to be identified but provided us with documents to confirm their stories.
What is causing the American Express financial review?
Although American Express does not publish the details of its fraud detection algorithm, one of the most common causes of chargebacks appears to be a rapid increase in cash usage. If you’ve been a card member for a few years, you typically spend $2,000 a month on your card, and suddenly, you start spending $15,000 to $20,000 a month, you may want to trigger an update.
Another common and easily avoidable reason is going over your credit limit. Cycling refers to increasing your available credit limit, paying off your card and repeating the process during one payment statement.
One of the people I spoke to believes his first review came from cycling one of his Amex cards too often. The card had a credit limit of $3,000, and he charged more than $50,000 every month.
Sometimes, innocent behavior can lead to your account being flagged. A friend of mine, let’s call him “Joe,” bought $100 using his American Express® Gold Card. The purchase appeared on her pay statement as a $100 balance she owed.
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After returning the item for a refund, his balance went to $0. The refund served as his “payment” for the month. However, it tripped a fraud alert as his balance went from $100 to $0 without a direct payment. As we will see later, this was a simple case, and his knowledge of financial review was not difficult.
Some interesting behaviors that have been reported to trigger financial reviews include having a charge on one of your Amex cards and overusing the Amex card’s “check spending power” tool.
Hundreds of people, including myself, spend a lot of money on their Amex cards and never run into problems. High spending doesn’t guarantee an update, but certain actions may trigger it, such as quickly increasing your spending and cycling your credit limit.
Related: American Express Membership Rewards: The Ultimate Guide
What is the American Express financial review?
For many people, the first indication that their account is under review is that it is declined at the time of purchase. During the review period, your charging privileges will be suspended, and you will not be able to use your Amex cards. (I’ve heard of people being offered a $1,000 credit limit at the time of the review.)
When you log into the Amex app or website, a red triangle will appear, letting you know that charging has stopped and directing you to call a number.
You will also receive an email from Amex with additional information, confirming that your account is under review and informing you that it may be closed if you fail to provide documentation to Amex’s requests. Here is a screenshot of an email one customer received.
As you can see above, “Joe” was given 14 days to contact Amex and provide all requested documents. This is why you should deal with these types of requests immediately.
What is the American Express financial review process?
Charges vary from case to case, but generally, Amex will ask you to fill out Form 4506-T, which authorizes the issuer to access your IRS tax information.
I spoke with a person who survived four financial reviews (two for him and his wife). He explained that Amex will use the adjusted gross income on your tax return to review your credit card application instead of the income you provide.
If you have been honest with your income, as you should be, this should not cause any problems. If you were not present and your adjusted gross income is significantly lower than the income you listed on your application, Amex may lower your credit limit or close some or all of your accounts. In this way, he explained that the financial review process is more about income verification than anything else.
“Joe” was easy, perhaps because his case was more about a system error than anything he did. Amex asked him to provide bank statements from two different banks, including the one he used to pay his credit cards. For those concerned about privacy, this process is less invasive than giving Amex access to your full tax refund.
Related: Who should (and shouldn’t) get American Express Platinum
Do I have to comply with the American Express financial review?
Your tax forms and bank statements are your most personal documents, and you may not want them viewed by anyone for a number of reasons. Amex cannot compel you to produce documents during your financial review but understand that you can expect your accounts to be closed if you do not comply.
Remember that your Membership Rewards points will also be suspended during the financial review, meaning you cannot transfer them to airline or hotel partners or redeem them through Amex Travel. That may be enough incentive to comply with Amex’s requests, since account closure will result in you losing your points.
Bottom line
Sometimes, the appearance of something wrong is enough to get you into trouble, so it’s important to understand some red flags that can cause a financial review from Amex. You may not be able to avoid this if you have a business with usage rates that fluctuate from one month to the next, but let this serve as a reminder to stay honest with your credit card applications.
When you encounter a financial update, stay calm while responding quickly. Amex is not looking to penalize you for using travel rewards well; they want to make sure you can pay the expenses you incur.
Related: How to maximize points and miles when starting a business
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