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66 Comments
- inactive, on 02/23/2009, -1/+60You know it's bad when companies are paying to get rid of their customers.
- inactive, on 02/23/2009, -0/+34And they save all that money in reducing the junk mail they send out.
- prateeko, on 02/24/2009, -0/+33Considering I've never missed a payment on my Amex I'm kinda of annoyed I'd not getting a $300 credit for actually helping to keep them in business.
I'll settle for the fantastic customer service but cross my fingers for a "Thank you for not being an idiot with credit" bonus on my statement. - attercob, on 02/24/2009, -0/+28AMEX is dumping people who cary a large balances and don't look like they can pay it off. The idea is to find people who will likely not be able to pay off the card and instead of having them default on the Amex card, Amex is paying them to transfer the balance and then default on some other company.
For example: Bob has about $15,000 on his Platinum Amex. In the past he had no problem paying about twice the minimum due each month. It was great for Amex because they made a lot on the interest (couple hundred a month) and had already made about 3% of the base amount on merchant fees. But Bob just lost his job (or for some other reason looks like a bad risk) and can't afford all his debt (Amex, other cards, car, house, etc.). Amex is worried that he'll go under and leave Amex with a $15,000 loss. But if they offer him $300 now, then Bob will probably transfer the $15,000 balance to some other card. Then when he goes under Amex is ok and it's CapitalOne (or whoever) that takes the loss.
It's clever, TBH. - seo4one, on 02/23/2009, -3/+22omg a credit card company decided it might not be a good idea afterall to extend credit to someone who can't PAY for it??? What a revelation! If Visa and Mastercard follow suit and offer money to those who shouldn't have credit to CLOSE their credit accounts the economic horizon will look a lot better really quickly!
- speg, on 02/24/2009, -0/+17Not zero. They make money on transaction charges taken from the merchant.
- aletoledo, on 02/23/2009, -1/+15I got a similar offer from Chase for a no interest furniture store credit card they were managing. I can't understand their angle here.
- bradleyland, on 02/24/2009, -0/+13When they loan money at 0% interest, they're counting on a certain percentage of people failing to meet the term agreement and paying 25% interest, or whatever exorbitant rate the came up with. In today's credit situation, banks are suddenly finding themselves under capitalized in dangerous markets. Money out at 0% is bad for their bottom line, especially after all their other high-risk investments went belly up. They need liquidity badly (cash, not loan notes), so they're resorting to everything possible to get it.
Offering something like a $300 bonus to call in a loan is just a ploy by the banks to beat the rush. They don't care how you pay off that loan -- for example, using another credit card from another bank -- They just want the loan off their balance sheet. - virtualonliner, on 02/24/2009, -0/+10I wish I had gotten this offer :(
- murquiza, on 02/24/2009, -0/+9I have a blue, I rearely use it, they slashed my limit from 30K to 500 bucks. I'll be closing the account for free, and of course not comming back. The can shove the card.
- ARTLUKM, on 02/24/2009, -0/+9And AMEX makes a lot compared to VISA and Master Card in terms of transaction fees.
- inactive, on 02/24/2009, -1/+10SUCCESS PLAN:
1)Get an AmEx card
2)Load it to the max with tons of crap
3)???
4)Make 300$! - antime1, on 02/24/2009, -0/+8American Express actually makes the majority of it's revenues off of transaction fees. Hence the reasonably lucrative rewards they have (the Blue Cash Rebate card is amazing)
- Frozo, on 02/24/2009, -0/+7Their angle is they dont want people who either A) don't make any money for them because they always pay on time, or B) get themselves in so much debt that they are a liability.
- mike42979, on 02/24/2009, -0/+7Ok dumbass Visa and Mastercard are not the same as Amex, in fact Amex uses its own funds to back their credit cards whereas Visa and Mastercard only process transactions and are backed by member banks.
- antime1, on 02/24/2009, -0/+7Sure they can. Open up a 2nd credit card and do a balance transfer from one card to the other. Does it solve the problem? God no. Does it solve AmEx's problem? Yes sir.
- apena89, on 02/24/2009, -0/+7i'll give you $300 to give me your account.
- prateeko, on 02/24/2009, -3/+9Or if people didn't abuse credit like morons with no foresight we wouldn't be here either...
- wing05, on 02/24/2009, -2/+8Now, if they'll quietly roll over and go away, good riddance.
As a merchant, I haven't met another merchant who likes dealing with Amex. When openning accounts in startup mode, Visa and Mastercard are happy to deal with you while Amex's policy makes it look like they've got their snooty noses up in the air because you haven't been around long enough.
A year or two after being up and running, they call you and insist you take them and their associate JCB card.
The T's and C's indicate up to 30 days to credit your account on purchases while the other two turn around in 2-3 business days.
Every now and again, friends who do take Amex complain about Amex screwing up the payments or counting the number of people on social assistance walking into their stores and whipping out the Amex credit card.
Way to go guys... Claim exclusivity and high end, alienate merchants and then try to catch up with Visa/MC by giving your card away to anyone that can breath. When the economy goes south, pay people more money to close their accounts as you restructure. Brilliant! - tattertech, on 02/24/2009, -0/+6But think, some of the people that are really in trouble - they can't pay off the cards to close them.
- attercob, on 02/24/2009, -0/+6It was a different situation 6 months ago.... Back then, 0% looked like a good idea. Get people to transfer debt and then in a few months after the 0% deal ran out you can charge interest. Things changed and now people might not pay.
- TejInLA, on 02/24/2009, -0/+6Why wouldn't they want people who always pay on time? They charge the retailers for every purchase. That's why some gas stations have cheaper prices for cash.
- antime1, on 02/24/2009, -0/+6Very true. But the writing was on the wall. Now they are paying for it. Literally.
- tomz17, on 02/24/2009, -0/+6Getting rid of good standing customers doesn't buy them anything. They make more than enough money on merchant fees to stay profitable on those customers.
The article is poorly written. It sounds more like this offer is for people with outstanding balances and looks something like this.
You have $10k delinquent balance on your Amex card
Amex sends you letter asking you to :
#1) pay off balance by certain date
#2) close account
In return you get $300 amex gift check as incentive to do #1 and #2.
This action would reduce their outstanding liabilities as a company. - DorXtar, on 02/24/2009, -0/+6The $400 "cashback" I get from amex every year for paying my balances in full every month keeps me a happy customer.
- attercob, on 02/24/2009, -0/+5You don't know what you're talking about. For example AMEX makes between 2% and 3.5% on each purchase from fees they charge the merchant. In fact, AMEX's main card is not really a "credit" card as it must be paid each month and the only money they make is the merchant fees + a $55 annual fee they charge the card holder.
If It they did not make money from the merchant fees that were enough to cover the transactions costs (including infrastructure) then they would not be able to offer the regular AMEX cards. - zeth006, on 02/24/2009, -0/+5Things are a lot different from the way they were back in 1972. It's no coincidence we started noticing the effects of outsourcing back during the 60s/70s especially around the time of the Vietnam War. A lot of low-skilled jobs have been getting shipped overseas. As a result, a lot of jobs at the middle/lower tier paying brackets have gotten cut.
As for paying people what they're worth, it's no surprise that the number of college graduates and graduate students has increased dramatically since then. While this might serve as a positive figure to the benefit of mankind, it only shows that the average American has had to undergo more education and more job training just to earn what he/she earned decades ago.
It's a very competitive world. You are no longer cool for having that college degree since everyone around you has one. I would know because my job-hunting life kind of sucks right now. - eramos, on 02/24/2009, -0/+5Wow what *****. Clearly you needed to have that 30K limit to not spend any money.
- inactive, on 02/24/2009, -1/+6deviously clever...
- r00fus, on 02/24/2009, -0/+5Hmm... I'm not sure if the relationship between my CC and me is one of being a customer.
Credit cards are the ultimate middle-men, so you're both a customer and a product. I think they're finding it difficult to sell your debt (the product) to their real customers, the institutional investors. They also make money off you, but not as much as selling your debt. - SuperVepr308, on 02/24/2009, -1/+6I have had an AMEX for over 15 years with no problems. Pay off your balance every month and all is well. If you don't, the will break you kneecaps. I kind of like that since it keeps you out of huge rotating debt.
- inactive, on 02/24/2009, -0/+5Ding ding. 1.25% cash back.
While I don't spend $32,000 a year, I do get about $175 every year - just for paying my credit card off on time and monthly. :-) - mike42979, on 02/24/2009, -0/+5Yeah no ***** man not one missed payment in 10 years on anything and what do i get nothing but a ***** of interest i paid them over the years.
- infinitus64, on 02/24/2009, -0/+4pssh.. try offering him some anus laptops.
- Sethisis, on 02/24/2009, -0/+4Amex has been aggressively lowering my mothers credit limit, even though she pays her card (business and personal). She just closed all her Amex accounts last month.
I'm surprised they haven't lowered my limit yet, my mom has better credit than I do (student)! - TheSpook, on 02/24/2009, -0/+4I think the CC companies like students.
- TheSpook, on 02/24/2009, -0/+4I just went to their web site to check it out and got an Internal Server Error after I clicked on "Personal Credit Cards." I guess that's one way to keep your customer count low.
- paolo03, on 02/24/2009, -0/+4@TejinLA - income from those types of transactions are very small. I think they charge somewhere from 3% to 5% of the transaction. It's too small to keep them alive. They earn money through finance charges and fees.
- insomniac8400, on 02/24/2009, -0/+33-5% is too little to stay alive????? Cities tax less. Hopefully one day congress will wake up and remove this tax burden from businesses. No business should have to donate 3% of their total sales just to accept a credit card.
- FreddieD, on 02/24/2009, -0/+3AmEx Blue has a 1.5% cash back (with 5% on gas and grocery purchases). Good ol' Mint.com found it for me and got a commission off of it as well as upgraded my old 1.0% cash back card at the same time.
There is also a 2% cash back MasterCard from Schwab, but the money goes into the Schwab account (presumably to encourage you to use their investment services). I haven't looked at the offer in detail yet, but it's the only 2% cash back card I've ever known, with monthly deposits no less (my AmEx Blue only deposits annually).
If you are a cash back junkie like me who pays their card every month and just milks the cash back bonus, i'd highly suggest adding creditcardwatcher.com to your RSS reader. I'm in no way affiliated, just passing the nugget of wisdom along. - iceman0113, on 02/24/2009, -0/+3Leaving it open is much better than closing it. If you close any of your cards or if they close your cards, your credit score tanks. I've seen my friend's credit score drop after closing a Best Buy card and another card he opened.
- superflydugg, on 02/24/2009, -1/+4I wonder when they will ask me if I want to do this.
Looking back at when I often ask, and I know at the end of the day it is my fault, but WHY would they give a kid like me SOOO much credit??? What were they thinking! lolz. - KIERANMULLEN, on 02/24/2009, -0/+3I do not understand their angle either. We applied for a costco business AMEX card and they gave us a 20k limit easily. Other CC's will only give us 8-10k. We have about 8-10 CC's total but only use 2 of them on a regular basis and never carry a balance. Usually under 1k.
- Roguecop, on 02/24/2009, -0/+3It is the ultimate stupidity to run up debt on an AMEX plat(gold or green). These are charge cards not meant to carry a balance. They also carry higher aprs than other cards, It's interesting to note that even less than a year ago I was receiving mail from Amex actually encouraging me to carry a balance on larger purchases. American Express changed their business model several years ago to take advantage of a growth economy, even though key indicators said the economy was about to go down the crapper. Now they're in big trouble. Also it isn't the marginal types going into default on these cards, it's upper income business owners(like car dealerships) and Master degrees with BIG balances losing their ass.
- 3Den, on 02/24/2009, -0/+3Amex has credit cards as well as the original charge cards...
- TejInLA, on 02/24/2009, -0/+3That means that you're making them money. You pay back your credit regularly, so they don't have loans in their books for long. And they get money from the retailers you make purchases from.
- cubicledrone, on 02/24/2009, -1/+4"it only shows that the average American has had to undergo more education and more job training just to earn what he/she earned decades ago."
Except they aren't earning what they earned decades ago. Inflation hasn't stopped. Only the wages have.
"It's a very competitive world. You are no longer cool for having that college degree since everyone around you has one."
That's interesting, because only 15% of the workforce has a four-year university degree or better. Businesses are underpaying Americans and have been doing so for 37 years. That's a black-letters-on-white-paper fact. - maz2331, on 02/24/2009, -3/+6I'll bet many card issuers start doing this soon - especially targeting the most responsible of their cardholders. If you pay your balance off at full every month, they make zero money - and consider you to be a "deadbeat".
They need you to carry a balance and pay monthly interest - and hope and pray that you don't get too far out that you default.
And we're bailing this mind-set out? - wbowen05, on 02/24/2009, -0/+3I completely agree with the idea that they don't want their customers to pay on time. It's so they can jack up interest, which can actually become more than you spent over time. I'm one payment from paying them off and they have been hounding me with offers to upgrade my plan and to take X amount of money off and giving me "REWARDS" for blowing my money on cruises with their card. Thanks, but no thanks, I've learned my lesson.
- antime1, on 02/24/2009, -0/+3Except that 6 months ago AmEx was throwing around more 0% transfers than you can shake a stick at. If you had a pulse you basicly qualified. Now they are just trying to mitigate this disaster of a policy. (The stock has dropped like 70% in the year)
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