AMEX going broke ???

[Gordon]

Hi to all,

I haven't posted for sometime, however, a hot tip today...

Just got off the phone, to an AMEX Platinum 'supervisor', who told me a few disturbing facts....

Firstly, AMEX has no intention of reducing their credit card interest rates. Regardless of what the competitors are doing, AMEX rates will remain above 20% pa.

Next, Balance Transfers have been suspended indefinately. I asked, does this mean, they won't be available in the foreseeable future? " I can't tell you when we will be offering them again ".

I wanted to arrange a BT today. No formal advice, that the BT system was off. I asked, how did you notify me of this 'change' to the T&Cs of my card?? " It's been the case since November ".

This person also indicated, that new card applications will be more heavily scrutinised.

The conversation I had with the supervisor, is contrary to the current marketing push, to entice new card holders !!

According to the supervisor, AMEX is not in a financial position to offer balance transfers of large sums of 'cash'. All I wanted, was a BT of several thousand. " We are not offering that facility at this stage ".

So, if you were thinking of doing a BT to AMEX, and then BTing funds out again.... it's all off.

What's to go next? Reward Points ?????

regards,
GORDON

[oz_mark]

The PDS allows them to refuse balance transfers at their discretion, which means at the moment they refuse the whole lot. The issue Amex is facing is getting access to credit, which is obviously impacting their ability to provide Balance Transfers. Also, means they will be keeping their interest rates high, I would assume till such time as the credit markets free up.

[vet]

No, imo.

Their Utah-based bank is going to be a Federal Bank, with backing from the US Govt.

They've got $70USmil per quarter coming from a defendant card.

Staff will be slashed globally.

They're cutting costs of promotions

They're tightening up on credit - expect more 'unusual transactions' to turn your card off.

They're assisting a US Justice Dept 'civil' enquiry re surcharges.

They're just adopting a survival mode rather than using the 'crisis' as a opportunity to push for greater market share.

[AnonymousCoward]

Amex funded credit by securitising its debt, by selling commerical paper (short term corporate debt), and through longer term facilities. It doesn't have a banking deposit base to speak of, so it's dependant on accessing credit markets to fund its many billions in extended credit. Since credit markets seized up, it would be finding it much more difficult to secure that financing, leading to a tightening in credit offerings (in addition to the usual tightening that goes on when the economy is going sour)

[simongr]

Also the cost of credit to Amex has risen (as it has for all banks) thus impacting investment decisions.

[Gordon]

I must be living 'in the dark'....
Seems like most of you knew about AMEX's position.
I was really anoyed, that they didn't have the courage to post their intentions on their website, or send out a written message, like they did for the reduced Qantas association with AMEX.

No matter how anyone explains it, I can't understand, why we have to keep paying over 20 % interest on our damn cards !!!

regards,
GORDO

[docjames]

We keep "paying" 20% because most dont ever pay it (pay balance off each month) and thus dont care what the rate is, and those that do need the credit dont seem to understand they could get a personal loan from a bank @ about 10% instead!

[AnonymousCoward]

Originally Posted by Gordon

I was really anoyed, that they didn't have the courage to post their intentions on their website, or send out a written message, like they did for the reduced Qantas association with AMEX.

Reduced association with QANTAS is something driven from the QANTAS end, and it's a formal ending of agreements that affect benefits to cardholders.

General business decisions (such as tightening credit facilities) aren't really advertised by any bank or financial institution. You don't see CBA/NAB/Westpac/ANZ telegraphing what their decisions are WRT to changes in balance transfers and credit criteria on their websites.

No matter how anyone explains it, I can't understand, why we have to keep paying over 20 % interest on our damn cards !!!

You don't have to "keep paying over 20%". Pay your balance in full, or use a cheaper credit card. There are plenty out there.

Institutions that don't have access to really cheap deposits need to sell commercial paper (and the rates for that have jumped significantly) or they need to securitise (sell off) the debt (which is hard to do now - who wants to invest in buying CC debt in a tanking economy where more people are going broke?). So Amex rates will stay high.

CC issuers also charge more to cover the risks/losses from defaults. As the economy gets worse, more people will default and CC issuers make up for that risk by charging more.

There are ways to avoid paying any interest or paying less interest, and you just need to choose that options...

[rwatts]

I would be more than happy for Amex to double their interest rates if they reduced their merchant fees to be on a par with MasterCard and Visa.

Richard.

[Gordon]

Unfortunately, I changed jobs too often, and can't get any further credit for another year or so, until I stabilise in the one job.
I used to use balance transfers, as a means of "paying out the balance", which is why I'm so upset about AMEX dropping it.

GORDO