Amex cardholders offered US$300 gift card to close their accounts??
??Credit card issuer American Express is showing that it doesn’t want the loyalty of certain customers
by offering them a US$300 prepaid gift card if they pay off their outstanding balances and close their accounts.
The company made the decision due to fears that the current economic crisis will grow even more acute due to rising unemployment, which will in turn lead to more credit card defaults.
Amex says it has targeted a small number of US cardholders with outstanding balances and little card activity with the offer, which gives the recipient until February 28 to respond. This group began receiving letters earlier this month and it seems likely other card issuers may follow suit to offload what they calculate are their highest risk and most potentially expensive customers. American Express said in a regulatory filing that its annual net charge-off rate, which measures credit default, increased to 8.29% in January from 7.23% in December, while the rate for loans at least 30 days delinquent rose to 5.2% from 4.8%.
The group being targeted are credit cardholders and Amex is not making the same offer to corporate account holders. Each letter came with an RSVP code that, when submitted online, immediately cancels that member’s card. Members have from March 1 to April 30 to pay off their balances and receive the Amex prepaid card.
If customers fail to pay off their balance by April 30, they will not receive the gift card and their account will still be closed. The gift cards on offer, according to a notice on the American Express website, can be used wherever Amex cards are accepted.
Amex is one of a number of card issuers that have recently started closing accounts and putting up late fees and interest rates for cash advances.