Although using credit card rewards for amazing travel deals is legal, certain behaviors can appear questionable.
While card issuers have instituted rules to limit credit card churn and attract valuable long-term customers (think: Chase’s 5/24 rule), much of the tension between rewards travelers and the big banks comes from questionable credit card use.
Each card issuer handles this differently. Take American Express, for example. If your credit card activity triggers a fraud alert, American Express can place your account under “financial review,” which can be nerve-wracking.
Let’s examine Amex’s financial review process to better understand what it entails and how you can avoid it entirely.
This post is based on the first-hand experiences of some travel rewards experts who have gone through Amex financial reviews. Given the sensitive nature of the subject, they asked to remain anonymous but provided us with documents to verify their stories.
What triggers an American Express financial review?
While American Express does not publish details of its fraud detection algorithm, one of the most common reasons for a financial review appears to be a rapid increase in costs. If you’ve been a cardmember for a few years, regularly spending $2,000 a month on your card, and suddenly, you start spending $15,000 to $20,000 a month, you might want to start a review.
Another common and easily avoidable cause Cycle your credit limit. Cycling refers to maxing out your available credit limit, paying off your cards and repeating the process during a single billing statement.
One of the people I spoke to believed that his first review came from cycling one of his Amex cards a few times. The card had a credit limit of $3,000 and was charging over $50,000 per month.
Sometimes, completely innocent behavior can get your account flagged. My friend, let’s call him “Joe”, made a $100 purchase using it American Express® Gold Card. The purchase appeared as a $100 balance on her billing statement.
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After returning the item for a refund, the balance is reduced to $0. The refund serves as his “payment” for the month. However, he tripped a fraud alert because his balance went from $100 to $0 without a direct payment. As we shall see later, this was a relatively simple case, and his financial review experience was not difficult.
Other interesting behaviors that have been reported to trigger financial reviews include bouncing a payment on one of your Amex cards and using too much of the “check spending power” tool that Amex cards have. Consists of using
Hundreds of people, myself included, spend huge amounts of money on their Amex cards and never face a problem. High spending doesn’t warrant a review, but certain actions can trigger it, such as rapidly increasing your spending and cycling your credit limit.
Related: American Express Membership Rewards: The Ultimate Guide
What is American Express Financial Review?
For most people, the first sign that their account is under review is that it is declined during a transaction. During the review, your charging privileges will be suspended, and you will not be able to use your Amex cards. (I’ve heard of people being given a $1,000 credit limit during the review.)
When you log into the Amex app or website, a red triangle will appear, alerting you that charging has been suspended and directing you to call the number.
You will also receive an email from Amex with additional information, confirming that your account is under review and advising that it may be closed if you fail to provide the documents Amex requests. Here is a screenshot of an email a customer received.
As you can see above, “Joe” was given 14 days to contact Amex and provide all requested documents. Hence you should address such requests immediately.
What is the American Express financial review process?
Cases vary based on individual circumstances, but generally, Amex will ask you to fill out Form 4506-T, which authorizes the issuer to access your IRS tax information.
I spoke to someone who survived four financial reviews (two each for him and his wife). He explained that Amex will use the adjusted gross income on your tax return to reassess you. A credit card application instead of the income you provide.
If you are honest about your income, as you always are, it shouldn’t cause any problems. If you are not forthcoming and your adjusted gross income is significantly less than the income you listed on your application, Amex may reduce your credit limit or close some or all of your accounts. Thus, he explained that the financial review process is more about verification of income than anything else.
“Joe” had it a little easier, possibly because his case was more about a system error than anything he did. Amex asked him to provide bank statements for two different banks that he uses to pay his credit cards. For those concerned about privacy, this process is less invasive than giving Amex access to your full tax return.
Related: Who Should (and Shouldn’t) Get American Express Platinum
Do I have to comply with the American Express financial review?
Your tax returns and bank statements are very personal documents and you should never see them for a number of reasons. Amex cannot force you to produce documents during your financial review but understand that you can expect your accounts to be closed if you do not comply.
Keep in mind that your Membership Rewards points will also be frozen during a financial review, meaning you can’t Transfer them to airlines or hotel partners or redeem them through Amex Travel. That may be incentive enough to comply with Amex’s requests, as account closure could result in your points being forfeited.
The bottom line
Sometimes, the appearance of impropriety is enough to land you in trouble, so it’s important to understand some of the red flags that could trigger a financial review from Amex. If you have a business with expense levels that fluctuate from month to month, you may not be able to avoid this, but let this serve as a reminder to always be honest with yourself. Credit card applications.
If you experience a financial review, stay calm while responding quickly. Amex isn’t looking to punish you for using travel rewards efficiently; They want to make sure you can afford to pay back what you’re charging.
Related: How to earn points and miles when starting a business