NEW YORK (Reuters) - American Express Co, battered by mounting credit card losses, is offering $300 to a limited number of U.S. card holders who pay off their balances and close their accounts, the company said on Monday.
"We sent the offer out to a select number of card members," said Molly Faust, a company spokeswoman. "We are looking at different ways that we can manage credit risk based on the costumers overall credit profile."
The company did not say how many card holders would receive the offer and did not disclose the total of their card balances.
Card holders have until the end of February to accept the offer and must close their accounts in March or April. Each card holder will receive a $300 pre-paid American Express card.
If this isn't a pretty good indicator of whats coming down the pipe i don't know what is. In an effort to stave off the foreseeable onslaught of defaults Am Ex is paying off people to close their accounts.
Back when all this economic meltdown started I was trying to speculate what effects there would be and how it would play out and in what order etc etc. Its really what got me interested in what exactly is going on.
One of the first things I thought of is just when is my credit card going to just suddenly stop working induced by the collective puckering of the lenders.
I am sure AmEx has thought of just sending out notice of suspension, but as the article brings out this is an invite only offer. I think its possible that they are using this softer approach, as a test run. Freezing accounts would have an undesirable affect on a reputable company and would increase the rate of default from unhappy costumers.
But if/when the time comes they will just shut it down.
Fortunately I have very little debt. And as far as not paying my bills, my family eats first. That's a no brainer for millions out there that have lost everything including hope.