American Express Offers $300 to Cardholders to Close Accounts
American Express has found a polite way to close cardholder’s accounts. American Express is offering select customers $300 to pay off their balances and close the account. This move does not surprise me as credit card issuers continue to look for ways to limit their exposure. Since the collapse of Lehman Brothers in September of 2008 credit card issuers have slashed credit limits, limited marketing efforts and increasing interest rates and fees. These select cardholders have until February to decide if they want to participate in the offer. Furthermore, they are allowing those who choose the offer until March or April to close their accounts. American Express is supposed to then give you a $300 pre paid American Express debit card.
American Express stock has lost almost one-third of its value since last year. Recent unemployment has caused credit card delinquencies to rise more than forecasted. In order to expand its business, American Express has drifted away from catering to mostly affluent clientele. They have broadened their credit card portfolio to include loans to riskier individuals. This strategy has backfired for American Express due to the current economic downturn. American Express is looking for ways to save money and limit their risk exposure.
Every card issuer from J.P. Morgan/Chase to Citigroup has slashed credit card limits. This in turn has hurt our economy very much. Consumers with have had less money to make purchases from everything cars to television sets to video game consoles. The TALF (troubled asset loan facility) program is supposed to boost consumer credit. This bailout plan is supposed to give investors $1 trillion to purchase consumer asset backed securities. Since the collapse of Lehman Brother’s investments in asset backed securities have almost disappeared. The TALF plan is supposed to give investors confidences to once again invest in these types of securities.
In my opinion, American Express is looking for polite ways to cancel their less desired customer’s credit cards. These people might be less creditworthy and more susceptible to becoming delinquent with their bills. A $300 credit voucher certainly gives someone an incentive to close out his or her account. This is certainly a “nicer” way to cut someone’s credit. Instead of involuntary closing accounts like other credit card issuers have, American Express is giving certain cardholders a big incentive to closes out their account. This will certainly help out American Express’s public relations.
The last thing the country really needs is more slashed credit limits. The credit crisis has caused all kinds of havoc throughout our economy. As consumers, we need credit to continue to make purchases as we did. Businesses need this money to pay employees, who in turn spend money. The bottom line is less credit means less purchases. As purchases decrease, jobs will continue to disappear. This starts a viscous cycle that without government intervention will continue to spiral.
American Express has found a polite way to close cardholder’s accounts. American Express is offering select customers $300 to pay off their balances and close the account. This move does not surprise me as credit card issuers continue to look for ways to limit their exposure. Since the collapse of Lehman Brothers in September of 2008 credit card issuers have slashed credit limits, limited marketing efforts and increasing interest rates and fees. These select cardholders have until February to decide if they want to participate in the offer. Furthermore, they are allowing those who choose the offer until March or April to close their accounts. American Express is supposed to then give you a $300 pre paid American Express debit card.
American Express stock has lost almost one-third of its value since last year. Recent unemployment has caused credit card delinquencies to rise more than forecasted. In order to expand its business, American Express has drifted away from catering to mostly affluent clientele. They have broadened their credit card portfolio to include loans to riskier individuals. This strategy has backfired for American Express due to the current economic downturn. American Express is looking for ways to save money and limit their risk exposure.
Every card issuer from J.P. Morgan/Chase to Citigroup has slashed credit card limits. This in turn has hurt our economy very much. Consumers with have had less money to make purchases from everything cars to television sets to video game consoles. The TALF (troubled asset loan facility) program is supposed to boost consumer credit. This bailout plan is supposed to give investors $1 trillion to purchase consumer asset backed securities. Since the collapse of Lehman Brother’s investments in asset backed securities have almost disappeared. The TALF plan is supposed to give investors confidences to once again invest in these types of securities.
In my opinion, American Express is looking for polite ways to cancel their less desired customer’s credit cards. These people might be less creditworthy and more susceptible to becoming delinquent with their bills. A $300 credit voucher certainly gives someone an incentive to close out his or her account. This is certainly a “nicer” way to cut someone’s credit. Instead of involuntary closing accounts like other credit card issuers have, American Express is giving certain cardholders a big incentive to closes out their account. This will certainly help out American Express’s public relations.
The last thing the country really needs is more slashed credit limits. The credit crisis has caused all kinds of havoc throughout our economy. As consumers, we need credit to continue to make purchases as we did. Businesses need this money to pay employees, who in turn spend money. The bottom line is less credit means less purchases. As purchases decrease, jobs will continue to disappear. This starts a viscous cycle that without government intervention will continue to spiral.
Labels: american express, credit card issuers, credit cards, TALF
Credit Card / Financial news blog post by Todd Holliday at 7:40 PM 