AmEx paying cardholders to close accounts
Posted
Feb 23 2009, 02:42 PM
by
Karen Datko
Rating:
Remember the days when credit card companies used to reward people for signing up? Now, one company, American Express, is offering cardholders $300 to hit the bricks.
AmEx paints this offer as a way to help customers get control of their finances. We're not buying it, and neither is the blogger at CreditMattersBlog.com, who wrote, "The ‘we want to help you simplify your finances' language is a joke, of course."
Apparently AmEx is hoping that the customers who get this offer will take the hint: We don't want your business anymore.
If you get the "invitation" and decide to enroll, your account will be closed immediately. You also have to pay off your balance by April 30 or forfeit the $300 prepaid card. Any rewards points not used before you sign up will be lost. (See this AmEx Web site for other conditions.)
The deadline for enrolling is the end of this month.
As we've reported here, AmEx hasn't distinguished itself lately in the area of customer relations -- slashing credit limits, for instance. (Update: AmEx told The New York Times it will stop using "spending patterns" as a justification for reducing credit lines.) And there's a reason for that. Bloomberg reports, "American Express, which got $3.39 billion from the U.S. Treasury to boost capital, said last month that fourth-quarter profit from continuing operations fell 72% to $238 million as more consumers defaulted."
To stop that slide, the speculation is, it's offering cardholders a $300 incentive to make their AmEx balance a priority over other debt.
"What AmEx is trying to do is move to the front of the line in terms of getting paid back," Michael Taiano, an analyst at Sandler O'Neill & Partners, told Bloomberg.
AmEx won't say how many customers have gotten the $300 offer or how they were selected.
"I wish AmEx would make me this kind of offer. Instead, they cut my line from $15k to $4k, then down to $1k, in the span of a few months -- despite me paying the balance in full every month and never having a delinquency," said reader Bob at The Wall Street Journal's The Wallet.
Will this offer work?
"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," wrote Tom Petruno at the Los Angeles Times' Money & Co.
Dustbury.com said, "How many of these folks will come back to AmEx when times are better? Yeah, that's what I thought."
Related reading:
AmEx tightens the credit strings
More signs of feds moving into banks
New Citi rates: Should you opt out?
Credit card cutbacks hit consumers hard
