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.
Exactly.
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