Am Ex paying $300 for some members to close accounts

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DGenerateKane
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Postby DGenerateKane » Tue Feb 24, 2009 4:03 pm

I'd be tempted to do it if my AmEx wasn't my best reward card.


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Cucumber
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Postby Cucumber » Tue Feb 24, 2009 4:05 pm

Wow $300? I would totally be down for closing out my Amex Blue (the regular, not the Blue Cash) that I have and never use anymore. Amex if you're out there reading this please give me $300 to close this account :D :D :D
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The Fuzz
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Postby The Fuzz » Tue Feb 24, 2009 6:46 pm

You probably wouldn't be amazed at the volume of calls American Express has been receiving because of this announcement, but let me tell you that it is substantial. What people don't seem to consider are two very important details.

1. You have to be INVITED to join this program. It is going to target a very specific card member type and it isn't likely that someone who doesn't use their AMEX card very often is going to be that time. It is likely (and I'll post what I can find out on the exact type when I learn about it) the kind of account that is regularly 30 or 60 days late and the system has determined that their probablilty of default is extremely high. It is likely not in collections yet, but based on patterns that we have seen before, it will soon be in that status. So good paying cardmembers who can live without their card aren't the target market. It is likely people who have trouble paying the minimum let alone at all.

2. They don't tell you this, and I'm working really hard to get some confirmation of this information, but I was told from someone who is reliable for this kind of info, that when the account gets closed it is marked as "closed by creditor" and is given a 'paid collection' status on your credit report. Neither one of those is a favorable thing. So I guess if your credit score means nothing to you and you are willing to sell fifty or eighty points for thirty pieces of silver, then go for it. Its not worth it for anybody who is interested in keeping their credit in good shape. I'll try to find a copy of the full rules of this offer so I can validate that piece of information.

Anyway, it is a good incentive for some I suppose, but not so good for others. Considering the class action that has been filed against AMEX for taking on too high of risk cardmembers, this could just be part of their attempt to buy back some of their credibility in the lawsuit.


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The Fuzz
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Postby The Fuzz » Wed Feb 25, 2009 9:55 am

Very interesting stuff. From the language I would say this is a New Accounts document. They are the ones who process anything attached to acquisitions. TSC is 'Telephone Service Center' and is basically the number on the back of your card in most cases. They have a similar document that has mostly the same information.

The really interesting part is the 800 number and the code that you can give if you weren't invited. Be aware that they keep record internally and you aren't going to just be able to call and get added to the program. If your account is not marked to be able to participate, then even having a code isn't going to get you in. Besides, you don't really want your account closed and marked as a paid collection, do you? I don't question the wisdom of AMEX for having this program, but I do question the wisdom of cardmembers who jump into it blindly... Still, it is always nice to have information like this out there.

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fffresh
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Postby fffresh » Wed Feb 25, 2009 4:28 pm

In reality, this idea is actually quite smart. If the average cost of a default to American Express is $4,000 and let's say 50% of those selected for this program are likely to default, then paying $300 is much less than the $2,000 it would cost them on average for each account. These numbers I've given are only hypothetical but go to show you how a payoff scheme like this can actually make sense.

What I would like to know is how did they conclude to use $300 as the magic number. Why not use a sliding scale of anywhere between $100 to $300, depending on the size of the customer's balance?

AmexTrainer
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Postby AmexTrainer » Wed Feb 25, 2009 4:29 pm

That is an interesting find you have there. That is a document from our resource program here in New Accounts. I'm a trainer here in SLC and I've seen that before. I'm not too worried about it being here since it is just information that we are willing to give out anyway.

The Fuzz is right about having a code on the account. It would be something that indicates the offer was sent out to you and you won't be able to participate unless you have both the RSVP number and the code placed on your account. He is also right that this could be very bad for your credit report, so I wouldn't look at it as an easy $300 bucks. It can really mess up your credit. What do you think your other accounts are going to do when a collection appears on your credit report? Chances are that your other limits will be decreased and your interest rates will go up. This is not exactly the best thing for card members, but I can see why American Express would have gone this way based on a couple other things.

Anyway, I've lurked on these forums for awhile and I saw this thread linked over on Consumerist.com and I thought I'd chime in to verify the validity of the document that was posted. Great work in here guys! Keep the stream of knowledge and information flowing! In these days people need all the reliable and helpful credit advice they can get.

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Cucumber
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Postby Cucumber » Thu Feb 26, 2009 6:13 pm

Yea if this is a "closed by creditor" situation then that really sucks for the cardholder. Definitely not worth the $300 then.
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The Fuzz
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Postby The Fuzz » Thu Feb 26, 2009 11:50 pm

Q: How will the account closing be reported to the credit bureaus?
A:Your account will not be reported in a negative manner to the credit bureaus, however it will be reported as “closed at consumer request.”.



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