AMEX going broke ???

[Rick93]

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.

 

[Rick93]

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]

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.

 

[Rick93]

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

 

[docjames]

So, the next transfer will need to be to a non-Amex card? Or do you mean you cant get ANY new CC?

I guess that's the risk in constantly changing. Tough spot - hope you can hang on, just pay down as much as you can as quickly as you can i guess.

 

[ethernet]

Like American banks, Amex is hoarding cash and not loaning - contrary to what pollies say. One suspects they DONT know their true financial position, so are slamming things shut.

Most Americans I talk too tell me their credit card limits have been CHOPPED to whats outstanding, plus $500 - even if you have the highest credit rating, including doctors, lawyers and Funeral Directors.

As a result, shopping Malls in CA at least, are emptyish, and people are even walking out without buying anything, practically unheard of. Thus Australia bracing for a 4% or 300,000 drop in overseas visitor numbers.

Thinking this one out, is easy. Card and merchant fees/income will drop, and share analysts will spot the decline and go 'neutral'. If BT's are not offered, then relative market share will decline.

While credit providers stay pig headed, online alternatives such as Paypal, should be alble to grow their market share - As a strategy, this is a very bad move. The only acceptable reason might be AMEX lost its shirt on worthless derivatives.

But if the Fed loans at less than 2% and you can make 20%, and may even get bailed out, you would be a fool to bauk at easy money.

 

[Dave Noble]

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!

I would disagree that most don't ever pay for it. There are a *lot* of people maintaining debts on cards based on news reports ( e.g. Credit card debt hits record $44 bn | Money | News.com.au ) with the average debt now being around $3200 on which interest is being accrued

In relation to the 20% though, no one is forced to take out debt on cards and the interest rates are published so hardly should come as a surprise to those with cards

Dave

 

[Rick93]

Yeah, as I 'played' with a number of cards in the last few years... doing BTs from one card to the next, and applying for more cards, as the 'new' offers of 0 - 6.9 % came in ( for BTs ), I am now paying the price.

I have blown my credit rating for the next few years at least.

I have an incredible amount owing on credit cards, and am unfortunately stuck in this position.

Even Citibank won't transfer my credit card balance to one of their 'personal' loans, as they 'topped me up' with more credit in the last three months. I have to wait for nine months of stable account transactions, before they'll consider an application. Pretty much the same from AMEX, last time I enquired about 'rolling over' my cards to a personal loan, or even with my mortgage.

Thus, I haven't taken much interest in this Forum in recent months.... a bit depressed really.

Anyway, a Happy New Year to all you millionaires out there !!!

I've got a lotto ticket for this Saturday's big $30M draw..... maybe my luck will change?

regards,
GORDO

 

[medhead]

I would disagree that most don't ever pay for it. There are a *lot* of people maintaining debts on cards based on news reports ( e.g. Credit card debt hits record $44 bn | Money | News.com.au ) with the average debt now being around $3200 on which interest is being accrued

I'd be cautious about using that article to say people are maintaining debts. Yes, on average, I would have a CC debt of $3200 at every statement, but I also pay it off every month. I suspect that is just the total CC debt at a point in time. There is another figure often quoted that is related to the carry over debt month to month.

On the interest rates, I'm just glad I signed on to 2.9% and 1.99% deals earlier this year.

 

[medhead]

Even Citibank won't transfer my credit card balance to one of their 'personal' loans, as they 'topped me up' with more credit in the last three months. I have to wait for nine months of stable account transactions, before they'll consider an application. Pretty much the same from AMEX, last time I enquired about 'rolling over' my cards to a personal loan, or even with my mortgage.

You have a mortgage with AMEX?

If not and it's with a bank have you considered refinancing the mortgage. Surely, you want to renovate the bathroom or put in solar power. Or even switch banks to "get a better deal" and renovate. It seems to me that provided the reason isn't to pay down the CC the banks will be more likely to loan.

Then, at some point in the future, if you decide that you can't do those things in these troubled economic times. Perhaps it might be wise to pay down some CC debt.

Of course, I have a fair bit of equity and the bank is always trying to refinance my mortgage. I've point this down to the refinanced mortgage being counted as new business (it is a new loan), which might help some branches if behind in their KPIs. That could count in your favour. My experience could be out of balance.

 

[Rick93]

Sorry, but you missed my point...

I CAN' T REFINANCE.....

That's it. Full stop !!

No refinancing the mortgage ( no, not with AMEX )
No paying off CCs
No movibg CC debt to personal loan

NOTHING !!!!

I am well and truly stuck in my position, due to having " unstable " employment; too many credit cards, and too little equity in the house.

Nobody will touch me, at the present time.

It's just not as simple as ' pay off the cards ' etc. etc. WITH WHAT ???

I'm not after any sympathy, just stating, that I used to use BTs as a means of not paying full interest rates of 20 % plus, from lenders such as AMEX. Now that AMEX don't do it, and I have three AMEX cards ( among others ), I'm now suddenly stuck paying the full interest, with no alternatives, that I used to have.

GORDO

 

[docjames]

Well that sucks Gordon. I'm somewhat surprised your home loan lender wont let you consolidate everything into one loan, even if that lender is Amex (although they'd be happy not to - they want 20%pa from you!)

I presume you've tried approaching one of the "big four" and speaking to them about consolidation without luck as that would be my next approach - perhaps explaining your reasons for the credit history.

I guess you're the warning case for those who like to continually roll from one CC to another to take up new offers.

I hope you get it sorted as soon as you can.

 

[pauly7]

I've got a lotto ticket for this Saturday's big $30M draw..... maybe my luck will change?

regards,
GORDO

Did you charge your lotto ticket to your C/C?

Sorry couldn't resist!! Good luck!

 

[drron]

Sorry,Saturday's lotto is mine.I am willing though to share it with up to 9 people.