[personal profile] reinaness
Amex is paying people $300 to close their accounts (Edit If they pay of their balances by April 30th)
What a strange world we live in


Date: 2009-02-23 06:12 pm (UTC)
From: [identity profile] lancehunter.livejournal.com
Wow. That is really crazy. I guess today's college kids won't have to worry about people harassing them and trying to offer free tee-shirts and the like for signing credit card applications.

Date: 2009-02-23 06:17 pm (UTC)
From: [identity profile] brcmapgirl.livejournal.com
Clarify that. They are closing the accounts. If you can pay by the deadline in full, they will give you $300. If you can't, your account closes anyway.

This is not really a quid pro quo here. Well there is something for something, but either way, the account is closed.

Date: 2009-02-23 06:42 pm (UTC)
From: [identity profile] reinaness.livejournal.com
they could just close the accounts and be done but they are doing this instead

this is targeted at selected people (not everyone is eligible) it is voluntary to enroll so they are incentivising certain people to pay off their balances by april 30th with $300 (taxable income of course)

so it is a strategy I haven't seen before.

unless you think they are closing the accounts anyway but that is not the way I read it
maybe that is plan b

Date: 2009-02-23 06:48 pm (UTC)
From: [identity profile] zuleikhajami.livejournal.com
From the article, "If the balance is not paid off by April 30, then you will not receive the $300 card. But your card will still get closed." My emphasis added. Seems pretty clear. I'm not bothering with reading the fine print or anything myself, but if the article is accurate, they're kicking people out. They're incentivizing getting the accounts closed down faster.

Date: 2009-02-23 07:15 pm (UTC)
From: [identity profile] reinaness.livejournal.com
but that only happens if you volunteer for the offer
they have the right to just close your account
but they are not doing that yet
because if they just close it they would not get the balance paid off

i am not sure why they wouldn't close it first and then give $300 if the balance is paid rather than let it be voluntary but maybe that gives them more information about the borrowers situation

Date: 2009-02-23 06:57 pm (UTC)
From: [identity profile] brcmapgirl.livejournal.com
Everything I've read says they are going to close the account, whether or not you pay it in full by the deadline. They're just offering an incentive to have it paid in full by a certain date so they don't have to write it off as bad debt or least recover their money from debtors they have targeted as able to pay. They're just trying to push themselves up a priority list of creditors for said cardholder.

There's a thing in bankruptcy called 'preferential payments' where you pay your bills before filing, and then the judge/trustee recalls the 'preferential payments' you made to creditors 90 days beforehand and then redistributes that money amongst all creditors.

AMEX would rather have that money now and pay it back later. It's the issue of present value of money to them as a lender. It's better to have the cash on hand now to do things, than risk never seeing it again.

Date: 2009-02-23 07:18 pm (UTC)
From: [identity profile] reinaness.livejournal.com
I can see why they would be doing this, and it is probably worth it for them but it is still an interesting strategy considering the years of "cash back" and airline miles and teaser rates that we just went through

to me this a very different direction for the credit industry

so you think this is targeted specifically at people at risk for filling for bankruptcy within 90 days?

Date: 2009-02-24 04:12 am (UTC)
From: [identity profile] brcmapgirl.livejournal.com
I think this is to try and get liabilities off their books and try to rake in as much operating cash as they can right now and kill off any bad accounts. It's quite a tactic since it's trying to get people with the ability to pay, to pay up.

If anything, this is what I see:
1. Debtor with Amex card sees offer.
2. Debtor decides to balance transfer the Amex debt onto another card.
3. Debtor receives the $300 gift card, but has really accomplished nothing.

The debtor has only moved the debt off to another creditor so it's not Amex holding the bag if the debtor does have to file bankruptcy. Plus the $300 gift card is likely a drop in the bucket in terms of interest that Amex has already collected, and strangely it will have a stimulative effect on the economy since essentially a gift card is a coupon that requires redemption to have value. It's not like it's a check they can save. They have to spend it ASAP before inflation takes effect.

Think about that... Lots of hyperinflation is on the horizon, says a financial journalist friend of mine...

Date: 2009-02-24 04:50 pm (UTC)
From: [identity profile] reinaness.livejournal.com
oh yes inflation is a comin'
and we are not ready for that at all

Someone on one of the blogs pointed out that is will be a great thing for costco since they only take amex

i wonder if lots of credit companies will follow suit?

Date: 2009-02-24 05:25 pm (UTC)
From: [identity profile] brcmapgirl.livejournal.com
What blog was that? I'd like to see that. It's actually going to be TERRIBLE for Costco, as customers will likely be declined from opening an AMEX in the first place.

Andrew Tobias says the best hedge against inflation is to buy staple goods in bulk, i.e. rice, flour, beans, cooking oil. I agree.



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