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    Default Am Ex paying $300 for some members to close accounts

    Check out this story. American Express is actually paying some people $300 for them to pay and close their accounts.
    AmEx Paying Members to Close Accounts
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  2. #2
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    I'd be tempted to do it if my AmEx wasn't my best reward card.
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    Centurion Member Cucumber's Avatar
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    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
    OBAMA
    Stop talking crap about him!
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    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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    Centurion Member Mogul of Pineapples's Avatar
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    Lightbulb Internal American Express document on "Balance Down" initiative

    Attention Credit Card Forum - here is an internal document from American Express that was leaked regarding this program. This should answer your questions about it.

    Balance Down Initiative

    DETAILS
    : On February 13, 2009, American Express began 3 promotion to entice Cardmembers to reduce their outstanding revolving balance on CCSG Lending products by offering them Pre-Paid Cards or Statement Credits.

    Handling Procedures: If you receive a call from a customer concerning the Balance Pay Down initiative, please refer to the Q&As below:

    Prepaid card test FAQs
    Q: Why was I selected for this offer?
    A: We’d like to offer you the opportunity to simplify your finances and pay off your existing balance.
    Q: My neighbor/friend received this offer but I did not. Can I enroll?
    A: We apologize, but we can only honor this offer for selected cardmembers. However, if you’re interested in paying down your balance, I can help you with that.
    Q: Can you help me enroll in the offer?
    A: You can enroll in the offer by visiting americanexpress.com/prepaidcardoffer and using the unique RSVP code provided to you on your mail piece. If you would prefer to enroll by phone, please call 800-794-1308 and use the code: 138580001. Please note that your account will automatically be cancelled when you enroll in this offer. You will need your account number to enroll in the offer.
    Q: I don’t have access to the Internet; how can I enroll?
    A: If you would prefer to enroll by phone, please call 800-794-1308 and use the code: 138580001. Please note that your account will automatically be cancelled when you enroll in this offer. You will need your account number to enroll in the offer.
    Q: I lost my mail piece that has my unique RSVP code; can I still enroll?
    A: Yes, you can call 800-794-1308 and use the code: 138580001. Please note that your account will automatically be cancelled when you enroll in this offer. You will need your account number to enroll in the offer.
    Q: I missed the enrollment period but am still interested in taking advantage of this offer?
    A: We apologize, but we can only honor this offer for cardmembers who enrolled during the stated enrollment period. However, if you’re interested in paying down your balance, I can connect you with a Customer Care Professional who can assist you with that.
    Q: I would like to pay off my balance, but keep my account open. Can I do that?
    A: By enrolling in this offer, your account will automatically be cancelled. If you do not enroll, but pay off your balance by April 30, 2009, your account will remain open but you will not qualify for the Prepaid card offer.
    Q: I enrolled in the offer, but I can’t pay my balance in full. What happens?
    A: As communicated in the enrollment letter, your account will be cancelled. You must continue to make at least your minimum payments until your balance is paid off. However, you will not receive the prepaid card.
    Q: My payment is due prior to March 1, 2009. Should I wait until then to pay so it qualifies for the Prepaid card (officially called Encompass Card)?
    A: To avoid any late fees, you must pay at least your minimum payment by the due date. As long as you make another payment for the remainder of your account balance between March 1, 2009 and April 30, 2009, your account will qualify for the Prepaid card (officially called Encompass Card).
    Q: Where can I use the Prepaid card (officially called Encompass Card)?
    A: Your card can be used at select merchants that welcome American Express® Cards. The Card cannot be redeemed for cash and is not transferable. Card terms and conditions, usage restrictions and guidelines apply; please see your card carrier for details.
    Q: How long will it take for the Prepaid card (officially called Encompass Card) to arrive?
    A: Your Prepaid card (officially called Encompass Card) will arrive 4 weeks after the end of the promotional period (April 30, 2009).
    Q: I enrolled in the offer and paid off my balance, but didn’t receive a Prepaid card (officially called Encompass Card)?
    A: I apologize for the inconvenience. Please give me a moment to review your account and confirm if the payments have been reflected on your account.

    If Cardmember has not received there offer connect to a TSC CCP to complete the request

    Q: I submitted a payment prior to April 30, 2009, but I see it did not post to my account until after the end of the offer period. Will I still receive the Prepaid card (officially called Encompass Card)?
    A: All payments must be reflected on your account by April 30, 2009 to qualify for the Prepaid card (officially called Encompass Card) offer. We apologize for any inconvenience.
    Q: Is my account considered closed at my own request, or at American Express’s?
    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.”
    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.”.
    Q: Will I receive a confirmation of the account cancellation?
    A: Your statement will reflect the account cancellation in the month following the account cancellation. Please note that depending on your account billing date, it is possible that you may not see the cancellation on your statement for up to two months.

    CCPs: If the Cardmember asks for a confirmation letter connect the Cardmember to TSC.

    Q: How long will it take for my account to be cancelled?
    A: It may take up to 2 weeks for your account to be cancelled after enrolling in the offer.
    Q: I enrolled in the offer, but my account still looks active. Why?
    A: It may take up to 2 weeks for your account to be cancelled after enrolling in the offer.
    Q: How long is my prepaid card valid for?
    A: The prepaid card will expire May 31, 2010; unused points will be forfeited the first day after the valid thru date, subject to applicable law. For additional information about your prepaid card, please see the full terms and conditions enclosed in your card carrier.
    Q: What do you mean by a $300 value prepaid card? How is the card denominated?
    A: The Card is point based with 1 point = $1 in purchasing power. Terms and conditions apply. Please see your card carrier for details.
    Q: I enrolled in this offer, but would like to reinstate my account? Can you assist?
    A: Let me direct you to the appropriate person who can assist you submitting that request. (CCP: Connect the Cardmember with an existing Customer Service CCP)
    Q: I am a Blue from American Express® Cardmember or Optima® Cardmember. What happens to my Membership Rewards Express® points now that my account is cancelled?
    A: Any points accrued in your Membership Rewards Express® program will be forfeited upon account cancellation. See Membership Rewards Express® program details for full terms and conditions.
    Q: I am a Blue Cash from American Express® Cardmember. What happens to my rebate now that my account is cancelled?
    A: You will forfeit your entire Rebate for the Rebate Year if your account is cancelled before the Rebate posts to your account. See your Cardmember Agreement for full details.
    Q: I received the offer for the prepaid card, but I would like a statement credit instead?
    A: We apologize, but your account qualifies for a $300 value prepaid card, and we cannot offer you any other incentives at this time.
    Q: I took advantage of the offer you sent me, but received a letter saying that my account was cancelled by American Express/for a credit reason. Why?
    A: Let me direct you to the appropriate person to discuss this with you. (CCP: Dial-transfer CM to RLA team).
    Q: If my account was cancelled prior to enrolling in this offer, can I still enroll?
    A: We apologize, but you are not eligible to receive the $300 value prepaid card if your account was cancelled by American Express prior to enrolling in this offer.
    Q: I enrolled in the offer, but subsequently received notification that my account was cancelled by American Express for credit reasons. Am I still eligible for the prepaid card if I pay down my balance?
    A: Yes, as long as your balance is paid down, you will be eligible to receive the $300 value prepaid card.
    Q: What does the footnote regarding taxable income mean?
    A: Any income provided by American Express may be considered taxable income to you. Please check with your personal tax advisor with any questions regarding tax implications.
    Disclosure: I am a moderator/paid staff of this site, which does have advertising relationships with some credit cards that are discussed and linked to. Regardless, anything I say is my honest opinion.

    Current Cards:
    American Express: Blue Cash, Simply Cash Bank of America: WorldPoints Platinum Plus Chase: Amazon, British Airways, Cash Plus Rewards, Freedom, Ink Cash Citi: Thank You Premier, Dividend Platinum Select Discover: More
    Primary Everyday Card: American Express Blue Cash
    Primary Travel Card: Chase Sapphire Preferred
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  6. #6
    Centurion Member The Fuzz's Avatar
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    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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  7. #7
    Centurion Member fffresh's Avatar
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    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?
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    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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  9. #9
    Centurion Member Cucumber's Avatar
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    Yea if this is a "closed by creditor" situation then that really sucks for the cardholder. Definitely not worth the $300 then.
    OBAMA
    Stop talking crap about him!
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  10. #10
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    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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