This week American Express (AMEX) let the cat out of the bag on their strategy for dealing with the imminent spike in credit defaults: entice people to pay off their credit card balances BEFORE they lose their jobs.
Of course, American Express is not spinning it in quite those terms. Their PR firm decided it would sound best to say they are helping people “simplify” their finances.
“American Express Co. is paying some cardholders $300 each to close accounts so the lender can reduce the risk of defaults as the recession deepens.”
“What AmEx is trying to do is move to the front of the line in terms of getting paid back” by customers who owe debts to multiple lenders, said Michael Taiano, an analyst at Sandler O’Neill & Partners.
In the meantime, the ability to get an American Express credit card seems as easy as ever with thousands of online credit card affiliate sites still featuring the Blue and Platinum cards.
Perhaps American Express strategy here is to replace the card holders who carry a balance with card holders who will actually use their card a lot and pay it off in full every month.