Posted on 02/25/2009 5:26:14 AM PST by kellynla
It used to be that credit-card companies lured customers with cash rewards. Now American Express Co. is paying to get rid of them. The card issuer is offering selected customers a $300 AmEx prepaid gift card if they pay off their balances and close their accounts.
The unusual move underscores how quickly conditions have deteriorated in the credit-card market. The current economic morass was provoked by spiking mortgage defaults. But as the economic crisis widens and unemployment climbs, there is growing concern that credit-card defaults will soar into the stratosphere as well.
"This is a huge paradigm shift," says Curtis Arnold, founder of CardRatings.com, a credit-card review Web site. He says he expects other large companies to follow suit with offers to entice consumers to pay off their balances, as card issuers cope with increasing defaults.
Selected members -- the company wouldn't disclose how many -- began receiving letters with the voluntary offer earlier this month, according to Molly Faust, an American Express spokeswoman. "It's a relatively small number of cardmembers who have sizeable balances and little spending and payment activity," she says.
(Excerpt) Read more at money.cnn.com ...
gotta wonder what kinda deal costco has cut with amex
As a merchant, I’m happy to take AMEX. If they charge a percent more, I don’t care. A buyer’s a buyer.
Only problem with that is your interest would have cost you 10 times that amount easily. They aren't forgiving interest payments. You still have to pay off all your debt to get the 300. Frankly this doesn't have a chance of working. Someone with a large balance is probably incurring $300 a month in interest anyway. Paying off their debt could have saved them thousands. A few might be able to transfer their debts to another card and get the 300 but for most, they would have paid it off long ago if they could.
Isn’t the rate on all rewards cards from Visa and Mastercharge as high or higher? I know AmEx was higher prior to all the premium card from those two places.
Is AmEx really more as a percentage? I thought all the premium cards from Visa and MC were 1-1.5% more a charge, anyway.
bfl
And if you live in Houston, you can get them to pay your balance off (Provided you buy a house in a ghetto).
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