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 ...
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.”
Yes, really.
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.
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