American Express offers to pay customers to go away
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American Express Co. has a new strategy to avoid more credit card delinquencies: pay cardholders to stop being cardholders.
From Bloomberg News:
American Express Co., the largest U.S. credit-card company by purchases, is paying some cardholders $300 each to close accounts so the lender can reduce the risk of defaults as the recession deepens. People who got the offer to ‘simplify’ their finances must pay off their entire credit-card balance by April 30, according to AmEx. Enrolling in the program cancels a customer’s account and may lead to forfeiture of reward points or rebates, the company said on its website. ‘This is an offer we made to select cardmembers to incent them to help pay down their balance,’ said Molly Faust, an American Express spokeswoman, in a telephone interview today.
The glaring question here is whether the only people who will take advantage of this are the kinds of paying customers AmEx would like to keep for the long run.
AmEx shares are down 43 cents to a new bear-market low of $12.54 today. The stock is down 32% year to date.
-- Tom Petruno