The Ticker

American Express Buying Out Cardholders

By Kirk Shinkle

Posted: February 24, 2009

It's another sign that the average American is in for a long stretch of tighter credit: On Monday, the AP reported American Express would offer some of its members $300 in exchange for paying off their balances and closing out their accounts. 

Douglas A. McIntyre of 24/7 Wall Street says that won't be a plus for the economy:

Between the lines, that means that customers who are not likely to pay their balances are being dumped. That means more people in the economy without access to credit, which means less consumer spending.

No one expects Amex to put patriotism above profit, but as banks and credit card companies cut loose a large portion of their customer bases, the time it will take for the economy to recover will be stretched further into the future.

Also, while AmEx has been shifting its customer base toward more middle-income customers for a while, it's still widely associated with a better-heeled clientele. Makes you wonder what we're in for in the rest of the credit card space where lenders extended excess credit to a larger pool of riskier borrowers.

As for AmEx shares, last week saw several analysts downgrading their outlook for the company. Standard & Poor's kept its "sell" rating on the stock and cut its price target on the company by $3 a share to $11. UBS also lowered its target from $20 a share to $13 with a "neutral" rating, and predicted "severe earnings pressure" for the credit card sector in 2009. AmEx shares are trading at $11.57 this morning.

Conveniently dropped after working towards membership points

Though I have carried a balance over for the past year, I have consistently paid much more than the minimum and just paid a large amount thanks to an IRS refund.

It is only the blue card that I have, but I have been dreaming of what I could get after redeeming the points I'd racked up. This part of the whole scenario seems quite unfair.

I will never apply for an AM EX card again. I was neither delinquent nor past my limit with this company. I can not in good faith wish them well in this economy. They reaped the rewards when my balance carried over all of those months. Theirs is a truly unfair practice and I will make sure I let everyone know this.

Cindy of IL @ Apr 06, 2009 18:23:08 PM

I just cancled my Platinum card member since 1980

I loved this Card ,used it all over the world. Got $10,000 emergency cash in Asia just by asking and a signiture, Charged a $25,000 item in TX store no questions asked just sign. Racked up 350,000 Membership points . Because I paid my bill in full every month. Last year I stoped traveling as much slowed down on spending. Smart wise and practical not in the eyes of AMEX.

Because I lowered my spending they decided to not approve anything over $1000 on my Platinum card. Hour on the phone credit service people can't even understand problem Told that bill is paid in full each month ,doesn't count ,30 years a good customer NO help .They only look at last 6 months spending. So I get treated like dirt . Every time I try to use card ...declined no reason , asked to pay this months balance early less than $1800 and then "we will let you charge something". Even declined reg.montly billing for a storage unit. BUT YOU WANT ME TO PAY $450 for this. American Express you are crazy I hope you lose millions of good customers like me .This is how you treat your good customers. You will never recover loss of good will.

Robert Landshof of TN @ Apr 01, 2009 02:13:18 AM

AMEX DISCRIMINATION CREDIT

I know times are bad right now, but please don’t start treating your loyal customers like crap. I’m very dissatisfied with the customer service that I recently received while calling into a call center. The representative was very rude as she proceeded to tell me that she was cancelling my sign and travel after she checked my credit report. My credit report hasn’t changed that was just a way for her to justify her poor decision since your company is falling apart. I know that the economy sucks and your company stock has fallen 70% since September, but that’s not my fault. It’s funny how your company used to care about their customers but now that times are rough your customer service really stinks. I guess your company’s new policy is to harass their customers so that they will cancel their American Express cards. In my opinion that’s discrimination I actually work in media and I’m going to report you guys to CNN so that they can do an investigative report. In all of my years with American Express I’ve never experienced such poor customer service. Your company threatened to cancel my sign and travel which is a feature that your company offered me. Now that your stock is down and the economy is in the dumps you want to force me to cancel my card. We the customers have rights too and were fighting back. I’ve spent thousands of dollars with your company and now you want to threaten me because of your lack of planning and budgeting. Now that you suddenly want to cut administrative costs it’s up to your loyal customers to find other credit. I can’t really say how I really feel about your company it’s really inappropriate, and it’s not positive. Your company should have been able to come up with a better solution or plan because right now your company looks stupid and unprepared

Dee Dee of CA @ Mar 23, 2009 17:13:40 PM

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The Ticker

The Ticker

Kirk Shinkle is a senior editor at U.S. News. He writes daily about ups and downs in equity markets, sectors and stocks. Formerly, he covered business and economics on both coasts for Investor's Business Daily.

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