Careful where you shop American Express

[NSXFRIEND]

Guilty by association :biggrin:

http://www.ajc.com/news/content/bus...tcards_1221.html?cxntlid=homepage_tab_newstab

“We’re just doing this to manage risk,” said Lisa A. Gonzalez, an American Express spokeswoman. She declined to say which retailers or mortgage companies are associated with consumers with higher default rates. She said it makes sense to examine these factors because “customers who have loans outstanding with certain lenders or customers who make transactions with certain merchants tend to have a higher proportion of credit issues or a higher probability of default.”

Now you have to watch where you shop, because if you shop where deadbeats shop or live where deadbeats live, we’re going to use that as a reason to lower your limits or increase your rates,” Mierzwinski said. He also questions whether the models are valid. “I just am not convinced that it’s a legitimate use of data mining,” he said.

 

[tosugrad]

Wow! Sounds like a back door racial profiling scheme.

 

[jond]

As shady as that sounds, it's smart. They should have started doing that 1-2 years ago. This is why:


"American Express, Capital One Profits May Plummet on Bad Loans
http://www.bloomberg.com/apps/news?pid=20601103&sid=awQORK_DSITE&refer=news

Jan. 22 (Bloomberg) -- American Express Co., the biggest U.S. credit-card company by purchases, and rival Capital One Financial Corp. may report that fourth-quarter profit declined as job losses caused more consumers to fall behind on payments.

Earnings from continuing operations at New York-based American Express probably plunged 73 percent to $227.7 million, according to 14 analysts surveyed by Bloomberg. Capital One, the McLean, Virginia-based lender reporting results later today, may say that profit fell 23 percent to $172.8 million.

American Express results are under “severe pressure” because of “accelerating credit and charge losses” Richard Shane, an analyst at Jefferies & Co. in San Francisco, said yesterday in a research note. Capital One has “no relief in sight” from rising losses, he said.

Consumers are struggling to pay their bills as the U.S. recession deepens, resulting in surging losses for American Express and Capital One. The two firms had to seek about $7 billion from the Treasury last year to ensure their survival. Unemployment climbed to 7.2 percent in December, the highest level in almost 16 years, and companies slashed payrolls by almost 2.6 million in 2008, according to the Labor Department.

Credit-card losses are “poised to get ugly” for American Express, said Shane, who boosted his estimate for charge offs this year to 9 percent from 7.9 percent. Growth in spending will rise 2 percent, compared with his previous 8 percent estimate. American Express reports fourth-quarter results Jan. 26.

American Express rose $1.27, or 8.1 percent, to $16.87 yesterday in New York trading, and has declined 61 percent in the past year. Capital One rose 4 cents to $22.96 yesterday and lost about 42 percent in a year.

Record Defaults

Defaults will probably set records this year as more delinquent accounts are turning into losses for credit-card companies, Fitch Ratings said in a November report.

Lenders are closing unused accounts and scaling back credit lines to insulate against further losses as the Federal Reserve approved rules last month to curtail interest-rate increases on current balances.

Card issuers, along with securities firms including Goldman Sachs Group Inc., insurers like Hartford Financial Services Group Inc. and commercial lender CIT Group Inc., sought status as bank holding companies to tap the government’s rescue fund.

American Express will get $3.39 billion, Capital One has preliminary approval for $3.6 billion and Discover Financial Services asked for $1.2 billion. Discover, based in Riverwoods, Illinois, was awarded bank holding company status last month.

Discover, a lender that also runs the fourth-largest credit- card network, said fiscal fourth-quarter profit more than doubled to $444 million after a settlement with rivals MasterCard Inc. and Visa Inc. The company agreed in October to accept $2.75 billion to resolve an antitrust case it brought against the world’s largest credit-card networks.

The company boosted its provision for loan losses by 89 percent, or $521 million. Loans overdue by 30 days or more rose to 4.56 percent, from 3.59 percent a year earlier.

To contact the reporter on this story: Hugh Son in New York at [email protected]

Last Updated: January 22, 2009 00:00 EST "

 

[NSXFRIEND]

Whats even smarter are MBA'a who introduced raising interest rates penalties on customers who had "other" negative connotations.

Same thing with Auto insurance companies raise your rates, if receive out of state ticket, though it's not showing on your State driving record.:biggrin:

 

[SilverStone05]

Yea, i'm not sure what American Express is up to.

I spent over $45,000 on my blue cash card last year. I just got a notice in the mail that they've cut my credit limit on that card.

The funny thing is, I keep getting these elaborate solicitations to switch my platinum charge into a "platinum business" charge. Additionally, American Express "pre-approved" offers keep rolling in.

Little do they know, since they no longer offer complimentary companion tickets I'll be cancelling my platinum card. :wink:

 

[NSXFRIEND]

Yea, i'm not sure what American Express is up to.

I spent over $45,000 on my blue cash card last year. I just got a notice in the mail that they've cut my credit limit on that card.

The funny thing is, I keep getting these elaborate solicitations to switch my platinum charge into a "platinum business" charge. Additionally, American Express "pre-approved" offers keep rolling in.

Little do they know, since they no longer offer complimentary companion tickets I'll be cancelling my platinum card. :wink:

Apparently calling them to review your account may restate your account to be whole again, as it has with some.

 

[SilverStone05]

Apparently calling them to review your account may restate your account to be whole again, as it has with some.

Meh...not even worth the effort. Its of no consequence to me.

 

[NSXFRIEND]

Meh...not even worth the effort. Its of no consequence to me.

Will effect your credit score due to history and purchasing power.

That is one of the concerns.

 

[SilverStone05]

In the grand scheme of things, the couple grand they chopped from that card is a pittance in comparison to my available credit.

What's my FICO going to drop...a point? :wink:

 

[NSXFRIEND]

Probably 6-10 points but if your in the 800club makes no difference:biggrin:

 

[01blacks4]

yeah screw AMEX....i was spending about 9-10K PER MONTH with them, on a gold card...paid in full every 30 days....

one day i go to use the card...its no good..??? i call them..they put a $1100.00 limit on the thing....$100K per year, to $1100 per month....

dont tell me its MY fault either, nothing changed, no excessive spending, same size bank accounts (thats a problem)....
they are "managing thier exposer" cause they cant charge me intrest, and i never paid late so they only made 3% on me from termanial charges.....

f*$&^ them....

 

[john@johnhudakracing]

Now you have to watch where you shop, because if you shop where deadbeats shop or live where deadbeats live, we’re going to use that as a reason to lower your limits or increase your rates,” Mierzwinski said.

See now this is why I always pay cash.......

 

[Briank]

Have one of the AMEX blue cards, almost never use it. Am constantly getting invited to take the regular AMEX just don't see any reason for personal use. If I had a business where I needed to charge 20K or 30K a month then an AMEX is the way to go regular credit cards balk at those levels.

 

[BD]

Yea, i'm not sure what American Express is up to.

I spent over $45,000 on my blue cash card last year. I just got a notice in the mail that they've cut my credit limit on that card.

The funny thing is, I keep getting these elaborate solicitations to switch my platinum charge into a "platinum business" charge. Additionally, American Express "pre-approved" offers keep rolling in.

Little do they know, since they no longer offer complimentary companion tickets I'll be cancelling my platinum card. :wink:

That is why, they think you might not be able to pay them back if you keep the same spending habit.

My little brother's friend who is in the credit card processing center is accepting less accounts. They are screening the applicants much deeper.

I met a guy who is supposedly living in his 2006 Bentley, I don't know how true it is, but he told me the car was paid off from collecting cash advances on his credit cards when he lived in New Port beach. He can't sell the car because the the money collected by be forced to pay for his debt. He was a real estate investor.

Amazing time we live in.

 

[peiserg]

Wow! Sounds like a back door racial profiling scheme.

how so? they never mention lowering limits by race.. only by areas where there are deadbeats.. makes me think you presume that only certain ethnicities are deadbeats.

 

[SOURCE 1]

That is why, they think you might not be able to pay them back if you keep the same spending habit.

My little brother's friend who is in the credit card processing center is accepting less accounts. They are screening the applicants much deeper.

I met a guy who is supposedly living in his 2006 Bentley, I don't know how true it is, but he told me the car was paid off from collecting cash advances on his credit cards when he lived in New Port beach. He can't sell the car because the the money collected by be forced to pay for his debt. He was a real estate investor.

Amazing time we live in.

Vance, Was this guys name Marty? I know of someone with the same story..

 

[SilverStone05]

That is why, they think you might not be able to pay them back if you keep the same spending habit.

My little brother's friend who is in the credit card processing center is accepting less accounts. They are screening the applicants much deeper.

I met a guy who is supposedly living in his 2006 Bentley, I don't know how true it is, but he told me the car was paid off from collecting cash advances on his credit cards when he lived in New Port beach. He can't sell the car because the the money collected by be forced to pay for his debt. He was a real estate investor.

Amazing time we live in.

Either that, or they don't want to keep writing me checks for my cash rebates. :wink: