For some American Express cardholders, membership has $300 worth of privileges: AmEx is paying card holders to close their accounts.
American Express Co (AXP), 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.
American Express, often seen as catering to relatively wealthy customers and companies, has been expanding its credit card business in recent years by reaching out to a wider range of clients. But that strategy has backfired. The company’s earnings tumbled in the fourth quarter as credit losses jumped and debt-burdened consumers slashed spending.
In addition, American Express reported last week that credit card delinquencies rose in January more than analysts expected, as U.S. unemployment increased and the global economy deteriorated.
American Express needs to reconsider some of its trademarked slogans.
- “Don’t Leave Home Without It” needs to become “Don’t Leave Home With It”.
- For our Canadian friends, “Ne Partez Pas Sans Elle” needs to become “Ne Partez Pas Avec Elle”
- “Lifetime Membership” needs to be changed to “Lifetime Membership Maybe”
- “Use The Card. Reap The Rewards” is clearly outdated. “Cancel The Card; Reap The Rewards” more accurately describes the current state of affairs.
Indeed, “Membership Has Its Privileges”, a $300 bonus bonanza to anyone politely asked to leave.
Mike “Mish” Shedlock
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