Tuesday, February 24, 2009

Pay Off Cash Advances, Charges on AMEX Card, Get Cash

Company offers select customers reward

cut cardAmerican Express customers who can pay off all of the cash advances and charges on their credit cards might be eligible for a cash reward.

The company has sent letters to certain customers who could qualify to get $300 if they pay off their full balances in March or April. The customers who received the offer have until the end of February to accept.

A strange business idea?

There is more to it than just paying off balances for these select customers. In order to qualify for the $300 reward, customers must also close their credit card accounts. So that’s the deal: If customers pay off all charges and cash advances and cancel their cards, American Express will send them a prepaid card worth $300.

This struck me as a little odd. I have never heard of a company offering customers an incentive to stop doing business with them. So what is the explanation?

Words from the company

Company spokeswoman Molly Faust says it’s part of the company’s strategy to cut expenses.

“We are looking at different ways that we can manage credit risk based on the costumer’s overall credit profile,” she said.

The company wants to save $1.8 billion in 2009, and part of its strategy is to scale back on efforts to gain more customers.

Strategy backfired

American Express’ earnings have fallen sharply this year, much like its competitors. Discover Financial Services, Capital One Financial Corp, JPMorgan Chase & Co and Citigroup Inc are all scaling back credit lines of select customers. ... click here to read the rest of the article titled "Pay Off Cash Advances, Charges on AMEX Card, Get Cash"

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