American Express To Pay Cardholders To Close Their Accounts
In an attempt to weed-out cardholders that are deemed to be at high risk for default, American Express has just announced that it will pay them $300 in the form of an American Express prepaid gift card if they pay off their balance in full. Now that may seem like a great deal but there is one condition, and it’s a big one.
Cardholders that agree to this plan will immediately have their credit card accounts closed down, regardless of whether they manage to pay down their balance or not. The balance must be paid in full between March 1st and April 30th. You might say that it is a spring cleaning of sorts for American Express. At least that’s what they’re hoping.
American Express says that only a small number of their customers will be offered this deal. The cardholders they are targeting will be notified by mail. It is being presented to the eligible cardholders as a way to ‘simplify your finances’.
Currently American Express reports that it has just over 44 million cardholders. That figure includes both consumer and small business credit cards.
While this may seem like a unique approach it is not new. National City did something quite similar a few years back. They offered their customers $200 to pay off their equity lines of credit.
The reason for American Express’ bold move is an attempt to protect their bottom line. Credit card charge-offs and defaults have soared over the past year. The charge-off rate stood at a record high of 7.7% industry-wide last December. Many credit experts see charge-offs reaching double-digits by the end of 2009.
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