Skip to comments.AmEx paying card holders to close their accounts
Posted on 02/23/2009 6:09:06 PM PST by rabscuttle385
NEW YORK (Reuters) - American Express Co (NYSE:AXP), battered by mounting credit card losses, is offering $300 to a limited number of U.S. card holders who pay off their balances and close their accounts, the company said on Monday.
"We sent the offer out to a select number of card members," said Molly Faust, a company spokeswoman. "We are looking at different ways that we can manage credit risk based on the costumers overall credit profile."
The company did not say how many card holders would receive the offer and did not disclose the total of their card balances.
Card holders have until the end of February to accept the offer and must close their accounts in March or April. Each card holder will receive a $300 pre-paid American Express card.
(Excerpt) Read more at finance.yahoo.com ...
Good way to foist your toxic debt on your competitors!
Hell I already closed my account had 18,000 limit still owe 5000 but it is closed screw them.
This may actually be a good move to help AXP stay around a lot longer, dump bad debtors and get back to the high value model.
Read between the lines: “You are a deadbeat, dear customer. Go somewhere else, you dont spend your card so often. We only want RICH customers who use their AMEX daily..now go away. BTW, here’s $300.”
Why blame them for your failure to manage your money?
this helps AmEx
Based on what you told us, you sound like you would have been one of the good customers who would not have been asked to leave have benefited from sticking with a solvent company, thus lower interest rates. If you had a history of paying your bills, it would have benefited you to stick with AXP versus going to one of the other big cards (if you did).
They're not just dumping bad debtors; they're dumping unprofitable debtors. During the height of the credit boom, AXP went nuts with low fixed-rate balance transfers for the life of the balance and jacked up customer credit lines like they were on crack.
Same thing. You don't pay your bills (ie bad debtors) then you are unprofitable. Their model was built originally on people paying off their balance completely every month, they did make the move to change that, they saw that it was unprofitable because of bad debtors, thus, they go back to what works. Good business move.
I just checked my account. They are offering triple points for shopping on Wal-Mart’s web site.
I don't think you understand. The accounts that they want to close are those that get paid off every month. They make less off of them.
Good strategy. Kind of like companies offering buyouts to deadwood employees.
No, they are not the same thing.
Unprofitable customers include those who pay their bills off in full each month and consequently don't accrue finance charges, who utilize low-rate balance transfers (1-5%), and/or who don't generate fee income.
Those customers are not bad debtors if they are in compliance with the account terms and agreement.
As I said, during the height of the credit boom, banks like AXP were throwing credit cards around with 3.99 percent and 4.99 percent fixed-rate life-of-the-balance offers with zero fees. Now, in the current economic environment, having customers who utilized those offers and are paying just the minimum each month...is simply unprofitable for AXP. But, just because a customer is unprofitable, based on a certain standard of profitability, does not mean the customer is bad.
I use my Discover card for just about every purchase I make. I like the rebates they give me. It is like a $20 discount every single month. Of course, I haven't paid them a nickel in interest, but I do appreciate the free cash.
I'm doing the same, except I pay interest on the part of my balance that I revolve at 4.24 percent.
Yes, that's my real purchase rate.
Otherwise, the rewards are terrific, especially the 5 percent seasonal cash back offers, and customer service is actually in the U.S. and not a foreign country.
They got a good spanking in about 1992 after they introduced the Optima card, not having the proper experience managing revolving credit. Economy went south, credit losses went north.
Not quite! - The accounts they consider unpropitable are those that seldom have a large balance, and pay off the account each month.
You’ve got it exactly backwards.
In the credit card industry, the responsible people who pay off their balance IN FULL every month ahead of the due date are known as “deadbeats.”
The credit card companies make huge money from the people who:
a) pay the minimum payment every month,
b) and carry a substantial balance,
c) have only one or two late payments a year, which jacks up the APR on their cards and adds late penalties to the account.
The card companies positively HATE people who either have a no-fee card and don’t use it often, or who do use it and pay it off every month. The only money they make on such cardholders is about 3% transaction fees on every transaction.
Making this a Faustian bargain!
With AMEX being a heavy funder of Planned Butcherhood, I'll be gleeful to watch them die.
Well then they must hate me (although I have not been asked to leave), I have 3 Amex cards, pay all in full every month, usually a day or two after the charge was made.. have had them for years, no buy out offer here.
All the credit card companies are in deep trouble. They are now in direct competition with the US government for diminishing investment dollars. Investors are buying Treasury bills instead of the bonds underwriting credit card holder debt. Without those bonds, there is no way the credit card companies can issue credit.
Two very strong words of advice: settle your credit card debt ASAP, before it is sold to a debt collection agency that charges enormous interest; and get a reusable debit card.
When the credit card companies collapse, millions of Americans are going to be unable to meet their monthly debt. Those that have bank personal checking will overdraft, so that banks will either cancel checking, or retailers will refuse to accept personal checks.
This leaves debit cards and cash. If at all possible, store a few thousand dollars in bills and coins in a safe place at home. If there is a bank holiday(s), you will likely be unable to access your funds electronically.
Never been late, never missed a payment. They're throwing a fit, though, and each month send me a letter saying they're lowering my credit limit by the amount I paid and that the problem is... well, the problem is they expected me to load more debt on the card at a higher rate and I didn't do it.
American Express doesn’t need to pay its customers anything to close their accounts. Just close them. Refuse to grant more credit. They have no obligation to pay for a customer to go somewhere else. This approach is beyond me.
This is a desperate move by Amex. They realize that widespread credit card default is the next phase of America’s economic crisis. In my view, the collapse of some of these bloodsucking credit card corporations will be one of the few positive outcomes of our current predicament.
Yep they were hoping that you were like my exwife. They don't like her anymore either.
Don't forget the folks carrying large balances at low, fixed rates for the life of the balance.
See post 26 for an example.
[As an aside, they hate the folks who were playing App-O-Rama games during the credit boom.]
In other words, in a normal non-bizarro world, banks live off the spread between the interest paid depositors and the interest paid to borrowers, net of any losses and other expenses. Now that ordinary folks have figured out how to turn the tables on the banks, the banks are hopping mad.
It won't change anything, except that it will be the Fed Gov sending you the dun notices. Personally, I'd prefer to do business with the banks.
Not really just being sarcastic.
That makes no sense. Yes, they do make less off of the responsible cardowners, but it makes no sense that they would pay them to close their accounts. My American Express balance is at $0 and I don't intend to ever use the card again. By your logic, I should be expecting my offer for a $300 Amex debit card any day now.
What this sounds like is a sad attempt by Amex to settle up with those customers with high balances that they have identified as most likely to default. Those customers were only profitable as long as they continued to struggle to pay the late fees, finance charges, and keep up with the punitive annual percentage rates that these companies giddily levy against those who are in the worst shape to deal with them. When those customers have been bled dry and default outright, they can cost Amex a lot of money.
Why are they paying money? Don’t they have it in their contract that they can dump you at any time for any reason?
I’ve been dumped for not using a card enough. No warning. Just, “Your account has been canceled. Bye.”
The only way it makes sense is if the people receiving the offers owe a TON of money to Amex, and Amex is hoping that the $300 offer might prompt them to actually pay off their debt instead of default on it entirely.
Good riddance AXP, no loss!!
I wonder if it’s too late to run up a balance pay it off and get my 300 smackers?
Thanks for the ping.
Ummmm it's 2009 - - stupid business decisions resulting in near bankrupcy are rewarded with free money from YOU - yep, YOU the taxpayer. So please, don't be too "gleeful".
No, you’re not one if you never use the card; it’s the ones that run $500 a month and pay it off. They want the $5000 and up people.
This stuff is starting to creep me out...
How about we ALL close our AMEX accounts and shut these internationalists down for good!
Sheeesh! So much for AMEX status! WalMArt!!!
Yeah! Stinking internationalists!
They keep selling us stuff for LOWER PRICES.
Rotten jerks! How DARE they give us that choice?
Before anyone starts whining about credit scores, etc. ask yourself... what did the Patriots of the American Revolution give up???? Life, Liberty and the Pursuit of Happiness or their FICO scores????
WOW! Let's choose cheap Chinese crap over political principles! Its all about consumption! Whoooo! Spend! Rack up debt! Bail his sorry ass out of political trouble before he's impeached! Whoooooo!
Yeah, it's all those INTERNATIONALISTS selling things for less. THEY are the ones who caused this mess.
Forget about the trillions in government overspending.
Forget about the tanking stock market.
Forget about over-leveraged derivatives and junk mortgages.
Forget about Fannie and Freddie.
It was all those darned INTERNATIONALISTS who did it!
So, it's the INTERNATIONALISTS' fault that people rack up debt? Is that your argument?
Bail his sorry ass out of political trouble before he's impeached! Whoooooo!
Is Obama's victory the INTERNATIONALISTS' fault too?
I think I'm catching on! Are they to blame for my HAIR LOSS too?
I just knew it!
Go away. You are not welcome here.